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Government Consults on Retail to Residential Conversion

R
Rent Guarantor Dec 21, 2020

While the coronavirus pandemic has affected many areas of people's lives, often not in a positive way, one development that has been embraced by many of us in the UK is the increased use of online shopping and services options. This has escalated the rate at which mainly online retailers are growing and also, the rate at which some bricks and mortar retailers are losing business. Amid this development and the continued lack of residential homes in the right areas across the UK, the government has launched an unexpected consultation on the conversion of retail units into residential homes in England.

In early December, the Ministry of Housing Communities and Local Government (MHCLG) launched a planning consultation to support housing delivery. The government is seeking views on the possibility of a change in planning rules relating to the change of use of Class E retail units into residential housing. 

This is something that has been discussed in the past but not brought forward beyond that. Should planning rules around change of use from retail to residential use change, one of the effects it could have is to provide a huge investment opportunity for the Build-to-Rent sector along with other construction and property development firms, not to mention lettings agencies, too.  

Supportive of PM’s ‘Build, Build, Build’ Statement

The surprise move comes as the government seeks to move forward with its home building promises to provide enough housing for the still growing population. By potentially opening up high streets and a wide range of commercially-used building for change of use planning, the government could ease the development of new housing. That’s because high streets already have a lot of the traffic and other infrastructure that households need.

Of course, it might not necessarily include proximity to the right mix of schooling, but doctors’ surgeries and other medical support for the elderly are often located in and around existing high streets, which could prove beneficial for households and housing development costs.

Indeed, the planning and delivery of the necessary infrastructure that housing developments is specifically detailed in the consultation details.

“The government has set out an ambitious long-term investment strategy to improve the country’s infrastructure and public services,” the MHCLG said. “As part of this strategy, we want to ensure the planning system does not unduly cause delays to public service infrastructure improvements.”

As with all planning requirements, when it comes to places of outstanding natural beauty or historically significant locations and buildings are involved, then existing rules will apply and change-of-use will continue to be much more difficult to secure. However, even with those caveats firmly in place, if the consultation proves supportive of permitting the change of use from commercial to residential rules to go ahead, then it has the potential to change the face of many high streets around England.

More Housing for Investors and Households 

Although the consultation doesn’t provide any certainty that such a rule change in the planning department will follow, if it does come to pass that change of use planning consent is more likely in commercial to residential buildings, then property investors and every type of household will benefit.

It’s possible that rental homes could make up a significant element of any residential property developments that are permitted under a change of use planning application. This would give investors interested in property – either on an individual or institutional level – more opportunities to invest in a property-related vehicle, with long-term regular returns.

However, they wouldn’t be the only winners. For tenants who prefer or need access to public transport and a mixed environment of retail and other infrastructure, allocating parts of high streets to residential development could prove to be the perfect option.

With so many potential positives supportive of permitting more commercial to residential property change of use planning applications, it will be interesting to see what the results of the consultation are and how the government will interpret them. 

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