And the key to reviving our high streets? Well, that lies with a different crisis: housing.
Do you recall there being a housing crisis thirty or so years ago? It’s still here; things haven’t moved on much. According to the government, we need to be building 300,000 new homes every year. That’s a lot – more than the number of homes in Oxfordshire or Worcestershire. So, we’re looking at building a new county’s worth of homes. Every year.
There’s a lot of land in the UK, but a lot of it is mountains. And we do need to farm. Finding space isn’t quite as simple as a quick glance at a map might suggest. But space to build is not the only consideration. You need infrastructure. You need jobs to which people can commute. You need homes near where people are from and where they want to live rather than attempting a resettlement programme. And this means trying to squeeze new homes into parts of the country that already have quite a lot of housing.
When crises collide
The death of the high street has led to a significant number of commercial buildings such as shops and offices becoming redundant. There is now a massive volume of unused brownfield land—land that has been previously developed—available across the country. The CPRE (The Countryside Charity) recently estimated that there are enough brownfield sites to accommodate 1.3 million new homes. We have over four counties’ worth of housing sitting on unused, previously developed land – all untapped.
If we could convert some of the commercial properties in our towns into residential, we would increase the number of people living there. With new inhabitants in towns comes the need for more amenities. These new homeowners would not be able to survive on cappuccinos, vaping products, and second-hand trousers alone. They will need shops. They will need bars and cafes, and restaurants. They will need entertainment and recreational venues and outdoor amenities. And these things will all automatically materialise because the demand is there from the new homeowners.
Brownfield redevelopment has a lot going for it
Much of brownfield land is in towns, where the retail revolution has had an interesting impact on our shops. Back in the day, the upper floors of shops would store stock. But with today’s just-in-time inventory systems, retailers no longer need the same level of storage space, and the ‘uppers’ of many shops are often unused. This makes it possible to convert these upper floors into residential use without making the store underneath unviable.
Why do we not have a hard hat shortage?
Shouldn’t our high streets be rivers of flowing hi-vis? The problem is that large housebuilders have a specific business model that is not aligned with brownfield development. It’s a numbers game. Visit any large new housing development, and you’ll be given a brochure where you can choose from the Bramley 4-bed detached, the Churchill 3-bed semi, and the
Westminster 2-bed townhouse, to name but a few. These are cookie-cutter homes, well-designed blueprints that can be plopped on any piece of virgin land anywhere in the country. The plans and drawings already exist, and the team knows how to build them. The only decision needed is which designs are going in which field.
Give these housebuilders an old commercial building to convert, and heads are soon being scratched. They would need to design a bespoke solution. The team isn’t experienced in converting buildings, particularly as they will have to deal with the constraints of the existing structure. Oh, and there’s the small matter of profits since converting a small building into flats produces only a fraction of the profits a new greenfield housing development would deliver. In short, housebuilders don’t want to build on brownfield land because it’s too tricky, they lack the skills to do it, and it doesn’t make enough profit.
Small-scale property development to the rescue
Small-scale property developers are not your average established developers but are much more likely to be individuals looking to get into property and not unreasonably feeling that the usual buy-to-let proposition isn’t as attractive as it once was. They are often existing landlords looking to grow their portfolios more quickly by generating regular lumps of cash. The beauty of this type of development is that you can afford to be relatively hands-off – unlike a flip, where the profits are substantially less, and you also invariably end up project managing things yourself. But with a small-scale development, you have the budget to hire a project manager, whose fee is paid for by the development finance. And this can make life a whole lot easier.
The government has done its best to make becoming a landlord as unattractive as possible over the last few years, but it’s gone out of its way to encourage people to become property developers. Putting in place an unprecedented number of new permitted development rights has allowed many different types of commercial buildings to be converted into residential use without the need for full planning permission. This reduces the planning risks involved in undertaking a conversion project and can dramatically reduce the time it takes to complete one.
Small-scale projects can usually be completed in 12-24 months, and most are capable of producing a healthy six-figure profit. That is not enough to tempt the bigger developers, but a highly attractive proposition for would-be or existing landlords and property investors looking to take advantage of the current glut of convertible buildings.
It’s this promise of more profit for less work that’s tempting more and more people to consider small-scale property development as an investment strategy. And encouraging these projects to focus on our declining high streets can only be good news for our town centres.
