Retail to Residential

by Marco Mauro

27 May 2023

Applications to convert shops into homes rise 37% in a year

The number of applications to convert shops into homes rose 37% this year, from 494 in 2019/20 to 677 in 2020/21. The rise in conversions is due to the high number of empty retail spaces in many locations as bricks-and-mortar shops continue to struggle.

Due to declining demand for retail units, it’s now often more profitable for landlords to sell off retail property to developers for conversion to residential or to change shops into homes themselves. This has led to a jump in applications to local authorities for planning consent.

Physical retail has declined in recent years as shoppers have shifted to the convenience of online shopping, a trend accelerated by the pandemic. As a result of lower footfall, 14.4% of retail units on the high street are currently vacant.

“With house prices and rents sky high, a lot of developers are keen to convert empty retail units to homes.”

How we shop has been through a huge shift in the last decade. Many of us can see the impact of the shift from bricks-and-mortar to ecommerce from the empty units on our local high streets. Converting those units to homes is an obvious step to take given the UK’s shortage of housing.

Amongst the 677 applications to convert retail space to homes in 2020/21, 45% of applications were refused by local authorities. The high proportion of applications being refused is due to some local authorities being wary of allowing too much commercial space to be taken out of use, as it is unlikely to ever return once lost.

If too many shops are lost, the value of a high street as a destination is eroded, often permanently. That makes it harder for remaining shops to flourish and can in some cases lead to a ‘town centre’ virtually disappearing. Once retail space is removed it is very difficult to get back. A lot of local authorities fear their areas becoming ‘dormitories’, with residents going elsewhere to do their shopping.

Developers looking to convert retail units to residential need to consider this as part of their planning applications – a mixed-use development rather than pure housing can stand a better chance of being accepted by a local planning authority.

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