Will new plans for city centre densification help solve our housing crisis?

Plans to create more city centre homes were announced by housing secretary Michael Gove when he launched his new `Long-term housing strategy’ on July 24th. 2023.

Mr. Gove announced that planning rules will be relaxed to allow the conversion of city centre shops, offices, betting shops and takeaways into flats and houses. While the government has previously stated its aims to focus on brownfield sites in towns and cities to prevent building on green fields, Mr. Gove’s speech underlined his desire to boost housing supply in the heart of the city.

The initiative has met with mixed reactions from the housing industry: many feel that it doesn’t go far enough in addressing the UK’s housing crisis and critics fear the result will be poor quality city centre housing.

Let’s take a closer look.

The Conservative Party’s stance on housing

The Conservatives claim that they will meet their manifesto commitment to building one million houses before the next election. However, they don’t look like meeting their other commitment to deliver 300,000 new homes a year by the mid-2020s; this challenge was made more difficult by a decision not to impose housing targets on local councils following a revolt by backbench Tories in rural constituencies that don’t want to see more housing.

Making his announcement, Mr. Gove stated that the government would be “unequivocally, unapologetically and intensively concentrating our biggest efforts in the hearts of our cities.” He said the plan would create walkable communities, reduce commuting times and help rejuvenate city centre high streets. The plan also includes new freedoms to convert lofts, extend homes, commercial buildings and warehouses to create new accommodation.

Empty city centre shops.

The plan for city centre homes in detail

To get the initiative underway quickly, the government will invest £24m in training planning authorities, along with £13.5m for a `super squad’ of planners to get problematic projects off the ground. Their first task is a major redevelopment to create a new urban quarter in Cambridge, comprising houses, laboratories and green space.

Of course, all this is not totally new; in 2015 a law came in to allow the conversion of shops to houses, so some properties can already be converted without planning permission under permitted development rights. According to Gov.UK national statistics housing supply figures, there were 232,820 net additional dwellings in England between 2021-2022, a 10% increase on 2020-2021. These figures included 210,070 new build homes and there were 22,770 gains from change of use between non-domestic and residential properties: 10,303 of the net additions from change of use were through permitted development rights, i.e., full planning permission was not required.

Housing is, of course, one of the main issues influencing voters and all parties are devising plans to create convincing policies before the next election in 2024. Putting clear blue water between the main parties, Labour has said it would reinstate housing targets and is looking at reassessing the Green Belt to enable councils to build on some areas.

Urban brownfield sites are the preferred places to build on but they can present a whole host of problems for developers.

Pros and cons of city centre development

Pros:

  • City centre densification makes sense, as that’s where there is most demand for housing, and jobs and infrastructure are in place.
  • Few cities can say that empty shops are not a problem and this is a way of improving their appearance.

Cons:

  • Converting shops and offices in a city centre may have a detrimental effect on the future viability of the area by limiting the reasons for people to visit.
  • Creating housing on busy and polluted city centre streets may have health and well-being repercussions.
  • There’s limited scope for car parking spaces in the heart of the city: often the only option is on-street parking.
  • Some offices may be converted on business parks which are some distance from a town or city centre: they may not be on transport routes, making them isolated.
  • Shops often have large windows fronting pavements which don’t fit easily with most people’s true taste in residential accommodation: the glazing can require shielding from passersby by the use of shutters or net curtains.
  • Past examples of converting city centre offices and shops to residential homes have created poor-quality housing: many examples have been cramped with insufficient ventilation. To make such conversions acceptable, they must be properly inspected, meet minimum space standards, and have full structural warranties.

Comments on the city centre initiative from industry experts:

A move in the right direction but `a drop in the ocean’

Julia Chowings, partner at property consultant Gerald Eve and Co’s Birmingham office, said:

Many of the initiatives are positive. Increasing densities in town and city centre locations makes sense. This idea was already being proposed by a number of local authorities, including Birmingham, and the £100m funding injection that the West Midlands will receive as part of the Brownfield Infrastructure and Land Fund should help push this forward. But focusing on city centres and brownfield sites is hardly a new idea and won’t single-handedly solve the housing crisis: it needs to be considered as part of a much broader package of options.

We welcome more funding for the regions which will play a key role. For example, an infrastructure-led solution to unlock homes and expansion of the life sciences sector will be transformational for Cambridge, given that there have been significant challenges in terms of water. As well known in the industry, however, resources at local authorities can be a challenge and while it’s great that this has been recognised, how the planning ‘super squad’ will work in practice remains to be seen.

On a smaller scale, permitted development from retail to residential may be helpful in some circumstances but is a drop in the ocean in terms of what’s required and may have unintended consequences in terms of town centres’ vitality.

Concerns about build quality of city centre conversions

Paula Higgins, CEO of property advice website HomeOwners Alliance commented:

We support action to build more homes, making use of inner-cities and brownfield sites to build more homes. While making it easier to convert empty retail premises into flats and houses is welcome in principle, these conversions are often of lower quality with poor ventilation. They certainly haven’t always been beautiful!

Government must learn from its mistakes by creating a wild west of office-to-residential conversions. Developers must be required to meet all building and space standards; these developments must be properly inspected by a third party and buyers should receive a full structural warranty. We already warn our readers to confront the reality before buying such homes: very few conversions have private or shared outside space and some are located in very noisy and polluted streets, while others on business parks are sometimes miles from shops and schools. There is a risk these conversions are unsustainable and quickly become homes people don’t want to live in once the newness wears off.

If the government wants to truly build homes in the places people want to live, they need a strategy for building in suburban and rural areas as well as cities. You don’t have to go back very far to unearth previous attempts to reform the planning system to encourage house building. In 2020, Robert Jenrick announced reforms to protect green spaces while making it easier to build on “brownfield land”. No one can argue with this, but we need to see the government deliver.

Lack of scale

The Local Government Association, the national membership body for local authorities, has said that some city centre properties are not suitable for conversion to residential and the result could be poor quality housing. The National Housing Federation, which represents housing associations, called it a `positive start’ but lacking in scale.

Final thoughts on the city centre housing initiative

Of course, it’s politically expedient to target city centres; the government is walking a tightrope between increasing housing and not alienating voters and their MPs in rural constituencies.

But there are a whole host of doubts about the strategy: doubts about the suitability of ground floor retail units making practical or even desirable homes are real and could well come back to haunt those investing in them and those who live in them. Lockdowns highlighted the importance of having garden space for people’s well-being, and converted shops on pavements can’t offer this.

Empty shops seem like an easy option for the government to target for city centre housing, but as the House Builders Federation pointed out, the idea does little to address the main problem of lack of housing supply. All parties agree that we need more housing, but the questions of how and where to build them at scale remain unresolved.

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