Conversion of retail properties into homes on the rise

 

Moves to convert former shops, offices and commercial properties to places to live to add much-needed stock to the housing market look to have begun according to newly-released figures.

The Housing Market Forecast for 2019 from the Royal Institute of Chartered Surveyors (RICS) shows that the number of additional dwellings available from a change of use is 68% higher than at the start of the financial downturn in 2008.

Former shops ‘a huge untapped resource’

The new data covers the period mostly falling before the Budget in October, when it was announced that local councils would have access to £675m in the Future High Streets Fund. The aim is to use the money to repurpose “under-used retail and commercial areas” into residential properties.

A recent survey of property professionals by MRI Software showed a great deal of positivity about the prospect, with 66% describing ex-retail premises as “the biggest untapped resource for new residential development”.

Another possible boost to the number of new homes being built came in October when Prime Minister Theresa May announced that a cap on borrowing for local councils to build affordable homes was to be scrapped. Overall, the government wants there to be 300,000 new homes being built each year by 2022.

That was a move described by RICS’ head of policy Hew Edgar as “a large and very positive step”, but RICS’ new data shows that the rate of new housebuilding has slowed. In 2017/18, 222,000 new housing units were added, an increase of 2% on the previous year. Net additions to the market have risen for five consecutive years, although the latest figure is the smallest rise in that time.

New build to rents on the rise

However, the number of Energy Performance Certificates issued for new places to live in Q3 had risen by 9% on last year to 240,000. And in the rental scene, the number of build to rent units finished rose by 26% in Q3. There are 42,000 currently being built, with a further 64,000 currently in planning.

Commenting on the report, Hew Edgar said, “Throughout 2018 as the supply pipeline remained weak, a number of policy proposals were made to address the market issues, most notably land value capture across the UK, and vacant land tax in Wales; but discussions around innovative policy measures need to continue through into implementation.

“If the Government wish to alleviate market concerns, that will persist Brexit or otherwise, then all possibly approaches and outcomes should be considered, including looking at tackling the rising number of long-term empty homes – which number 250,000 across the UK; a figure that borders on the Government’s new homes target.”

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Conversion of retail properties into homes on the rise

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