As the retail crisis deepens and it takes longer and longer to refill shops left empty by the spate of CVAs, permitted development rights for change of use from retail to residential are being utilised at a rate not seen before.
Here EG, using Radius Data Exchange insight, looks at the issues of letting retail property and the opportunities for private investors to transform it into a more lucrative investment.
Less than 2% of empty shops are now relet within the first three months of being marketed: it takes on average 340 days to relet a shop. Even landlords with the smallest units often struggle, with 70% of 0-999 sq ft shops remaining on the market for more than 12 months.
But every cloud has a silver lining – or at least it can have for the savvy private investor.
With permitted development rights, retail can now be turned into residential with relative ease. And the regime could be set to get even simpler.
As part of his latest Budget, chancellor Philip Hammond announced that the government would “consult on planning measures to support high streets to evolve, by creating a more flexible and responsive change-of-use regime with new PD rights that make it easier to establish new mixed-use business models on the high street”.
According to Radius Data Exchange analysis, change-of-use planning applications away from retail to other types of use are up by 125% since 2013. Within these figures, applications for retail-to-residential conversions are up by almost 10% year-on-year, resulting in the proposal of an additional 13,000 residential units from around 1,600 applications.
Change of use to new homes is increasing, accounting for 5% of all conversions from retail space in 2013 and now up to 18% so far this year.
So, while retail investment may need a more cautious approach in the current climate, private investors with an opportunistic outlook on the market could be set to benefit from vacant units and an overwhelming need to solve the country’s housing problem.
■ This article appears in the November edition of EG’s Property Auction Buyers’ Guide, out on 24 November
