The UK’s housing shortage is an evergreen subject – but we shouldn’t fall into the trap of assuming that inadequate supply is unavoidable.
It’s easy to fall victim to this kind of temptation. Just look at the likes of West Devon Borough Council, which – in February – officially declared a housing crisis, promising immediate action in order to address what’s been described as an “acute” shortage of homes for renters and buyers alike.
And, of course, these local disruptions in West Devon are a reflection of the UK’s housing situation as a whole.
According to a new report from Capital Economics (and commissioned by the National Residential Landlords Association) supply from the private rented sector needs to increase by something in the region of 227,000 homes per year.
According to Andrew Evans, Managing Economist at Capital Economics, “supply could fall by over half a million more over the next decade” – highlighting the need for changes to be made.
There’s no cure-all solution to the housing shortage, and – even if a kind of silver bullet were possible – property developers alone can only achieve so much without robust government support.
It is, however, worth asking what developers can do to help ease the supply shortage in sustainable ways – and the answer, at least to some extent, lies in the direction of conversions and changes of use.
What does the housing crisis look like in 2022?
February 2022 brought with it a fresh round of insights into the housing crisis, with a new report from the House of Commons Library discussing the UK’s chronic under-supply problems. The report explains that:
“in order to reach the Government’s target of 300,000 new homes per year, annual net supply would need to reach levels 39% higher than in 2020/21. To reach the 340,000 called for by Crisis and the NHF, the increase would need to be 57%.”
In other words, the government’s own goals may be too low – and we’re still not hitting them.
February didn’t just bring with it new reports on the housing crisis – it also provided us with a fresh Housing Minister in the form of Stuart Andrew.
This, as several commentators have pointed out, is the 11th Housing Minister to be appointed to the role in the last 12 years – and it goes without saying that this ‘revolving door’ approach to housing officials isn’t necessarily the best way to deal with a crisis characterised by its long-term impact and implications.
In short, we’ve started the year with two key issues at the forefront of the housing crisis: the government isn’t hitting its targets, and the short-term nature of government appointments aren’t the best way to deal with a long-term problem.
Clearly, this leaves a gap for the development sector to step up and bolster housing supply as quickly and efficiently as possible – and residential conversions are likely to be a key weapon in the fight against low housing supply.
Vacant units, unlimited potential
At the start of March, Propertymark’s campaigns and policy director Timothy Douglas wrote an open letter to Michael Gove suggesting that the UK’s 600,000 vacant homes could be used to ease the supply crisis – and, while this idea is unlikely to come to fruition, it does speak to an appetite for making better use of unused properties.
This appetite isn’t just a nice sentiment – according to the House of Commons Library, conversions are making a concrete impact on housing supply. “In 2020/21, around 28,000 new homes were supplied in this way, compared with an average of 9,000 per year in the 1970s and 12,000 per year in the 1990s.”
These figures tell us that future housing stock doesn’t have to come in the form of new houses built on expensive, undeveloped land – instead, existing commercial buildings can be turned into living spaces.
Land prices are certainly an issue requiring government attention, of course, with a 2018 report from the New Economics Foundation placing land “at the heart of the housing crisis” – but the positive impact made by office-to-residential conversions demonstrates that there’s more than one approach to dealing with supply shortages.
Developers can, in short, make a real difference by reusing and converting existing structures.
Clearly, conversions shouldn’t be overlooked as a means of easing the crisis.
Converted to the cause
Today, there’s every opportunity for conversions to continue adding to housing stock – particularly with recent extensions to Permitted Development Rights giving developers the freedom to breathe new life into a range of commercial units without planning permission.
At the same time, rules have tightened up when it comes to meeting quality standards for light and space – ensuring that conversions aren’t just statistics, but places to call home.
Not only do conversions allow canny developers to ease the supply crisis, but they also represent a more sustainable approach of doing so.
The carbon produced while building a now-vacant commercial unit would be wasted if it were demolished and replaced, but this kind of reuse gives the build a new and more sustainable lease on life, simultaneously adding to housing stock while allowing for an eco-friendly approach.
There’s no question that conversions represent one of the most potent (and prudent) ways for developers and investors to contribute towards solving the housing crisis – ticking boxes for sustainability and quality alike.