There is a shortage of houses to meet the high demand for homes, but the Nationwide Building Society has suggested that developers could convert more commercial buildings into homes.
A November 2017 PropertyWire.com article details how since 2014, it has become easier to obtain planning permission to convert offices, shops, pubs and suchlike for residential use. There is less red tape for developers and most local authorities will readily give planning permission. This has increased the number of commercial to residential conversions. In 2006/2007, there were 20,000 conversions of buildings to residential use and this rose to 37,000 in 2016/2017.
There has been a sharp increase in conversions in London. Change of use developments accounted for around 20% of all new homes added in the capital in 2016/2017. Elsewhere in England, 16% of new homes were the result of residential conversions.
The chief economist at Nationwide, Robert Gardener, said:
“While across the UK the price of housing and residential land is higher than the price of commercial property and commercial land, in London the gap is sufficiently large to dwarf conversion costs and make the developments very profitable.”
Gardener said that the increases in residential property conversions was encouraging, but he wants developers to significantly increase the number of conversions as this would help ease the housing shortage.
There are plenty of lenders who provide commercial mortgages, but mortgages and bridging loans are available to finance the work of converting commercial property to residential accommodation, whether for sale or rent.