Retail to residential conversions set to rise

The government’s decision to grant new housing applications in England “automatic” consent as part of planning reforms should lead to a surge in housebuilding. 

Sweeping changes to the planning system in England will make it easier to build much-needed new homes, the housing secretary has said.

Jenrick announced earlier this week that a “permission in principle” will be awarded to developments on land designated “for renewal” to speed-up building.

It comes after the prime minister pledged £5bn to “build, build, build” to help boost the economy and increase new housing supply. 

With the amount of vacant retail space set to increase following Covid-19, retail conversions could help solve the shortage of housing supply. 

Government data shows that the number of retail properties approved for conversion to residential housing increased by just 2.8% to 404 last year, up from 393 the previous year. 

But changes to the UK’s planning system proposed by the government will be an important step in increasing the speed at which empty retail property can be converted into much-needed housing, according to Boodle Hatfield, a private wealth law firm.

Developers will also be able to demolish and rebuild vacant residential and commercial buildings without planning permission, provided they are rebuilt as homes. 

Residential developer, Ballymore, recently announced it plans to buy a 190,000 square ft, north London shopping centre for £75m and convert this to residential housing. Boodle Hatfield says that more lending to the construction sector is needed to finance a greater number of large-scale residential developments, such as that planned by Ballymore.

Reports show that up to 340,000 new homes are needed per year to cater to demand. The existing government targets to provide 300,000 new homes per year by the mid-2020s falls significantly short.

Simon Williams, partner and head of property at Boodle Hatfield, said: “Changes to planning legislation will be extremely beneficial in helping to speed up the development process.”

“Unfortunately, the retail sector will be one of the bigger casualties of the coronavirus crisis, which will sadly lead to many businesses being forced to shut and even more vacant units. It’s good news that this space will be able to be put to use in helping to relieve the UK’s chronic housing shortage”

“However, lack of funding to the sector remains a barrier to the number of housing developments that can go ahead. More financing will be needed, to avoid vast swathes of deserted spaces.”

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