Industry Insight Episode 7 | A High Street Demise Outlook

February 16, 2021

In the event you missed our previous episodes, please see our catch-up episodes below:

Industry Insight Episode 7, we are discussing the topic “New Housing Options Post-Covid-19”

Industry Insight Episode 7 | Repurposed retail premises set to help ease housing crisis

As we reflect on the anniversary of the first lockdown, the economic and social consequences of COVID-19 remain clear. The transformation of UK high streets serves as a visible reminder of the pandemic’s far-reaching effects. Vacant retail spaces now dominate once-busy commercial areas, highlighting the scale of the challenge.

Retail Sector Struggles and the Rise of Empty Units

Over the past year, businesses of all sizes have faced closures, with some unable to recover. Established brands and family-run shops alike have been forced to shut their doors, leaving streets lined with unused retail units. This situation now extends across the country, reshaping the commercial landscape entirely.

Opportunities Amid Challenges: Repurposing Redundant Spaces

While the challenges seem overwhelming, they may present new possibilities. Could these empty retail units be converted to address the UK’s housing shortage? Transforming commercial spaces into residential properties could ease the pressure on housing demand and unlock new mortgage opportunities.

Revitalising Communities and Expanding the Mortgage Market

Repurposing commercial units into housing has the potential to revitalise struggling areas and provide a solution to housing shortages. For lenders, this shift could inspire innovative mortgage products tailored to support property developers and first-time buyers. Streamlined planning processes could further encourage this transition, creating a win-win for communities and the property market.

Adapting to a Changing Property Market

The pandemic has permanently altered the UK property market, but these changes bring opportunities for adaptation. Addressing the housing crisis by repurposing empty retail spaces could provide a sustainable solution. With strategic planning and collaboration among developers, lenders, and policymakers, the market can find innovative ways to meet evolving demands.

Industry Insight Episode 7 | The background

According to the Local Data Company and PwC research, over 11,000 chain store outlets shut down between January and June 2020. Notably, the sector faced immense pressure from March 2020, as the first lockdown restricted operations to only ‘essential’ shops. This marked a significant turning point for retail sustainability.

Interestingly, the same research highlighted that York was the worst-hit area, suffering a net loss of 55 outlets. However, Harpenden, located in Hertfordshire and home to our Society, defied the national trend. It experienced a net increase in retail stores, showcasing resilience in the local market.

Although we are a locally based building society, our services extend to brokers throughout the UK. This broad focus allows us to analyse wider trends impacting housing and mortgage lending opportunities continuously. With the UK’s evolving retail landscape, these changes can influence property demand and investment opportunities in different regions.

We aim to remain informed about these market developments, ensuring we support brokers with relevant insights and adaptable mortgage solutions.

Industry Insight Episode 7 | Wider Housing Options

Adapting disused retail spaces into residential properties provides a viable solution to address housing shortages in prime locations. Across many high streets, efforts are already underway to repurpose outdated shops into more functional spaces. These conversions often involve splitting units for mixed retail and residential use or fully transforming them into flats or apartments.

Such initiatives address urban housing demands while revitalising declining retail areas. Additionally, they contribute to regenerating communities by creating a blend of commercial and living spaces. Consequently, these projects bring economic and social benefits to neighbourhoods previously struggling with unused retail units.

Industry Insight Episode 7 | Changes in planning

In recent years, the UK government has relaxed permitted development rights. This change allows offices, pubs, and other redundant buildings to be converted into housing. Consequently, there is now greater flexibility for transforming unviable retail units into residential properties.

Advancements in construction techniques, such as modular building methods, are also contributing to this trend. These methods enable quicker and more efficient conversions of retail spaces into housing. Additionally, they reduce the disruption caused by lengthy construction projects.

The growing demand for housing, particularly in urban areas, further highlights the importance of such innovations. Modular construction is cost-effective and sustainable, making it ideal for these conversions. Therefore, combining flexible regulations with modern building techniques creates new opportunities to repurpose empty retail spaces effectively.

Industry Insight Episode 7 | Opportunities for the Mortgage Industry

As we transition into a post-pandemic era, new opportunities emerge for the property market. Once considered setbacks, retail closures now present development possibilities for house-building firms. This shift creates room for innovative housing projects, breathing new life into urban areas. Mortgage brokers, too, are poised to support these buyers, adapting to meet the demands of this evolving landscape.

Everyone involved in the property sector must remain prepared to capitalise on these changes. By embracing these opportunities, we can collectively contribute to the industry’s growth. It is crucial to recognise the importance of readiness when navigating new market openings.

Future mortgage applications could take on a different form as unique types of properties enter the market. This shift challenges traditional norms and creates fresh avenues for business expansion. Adapting to these trends gives those who serve the housing sector an excellent chance to thrive.

Specialist lenders, such as ourselves, are well-equipped to manage this transition. By manually underwriting each application, we ensure a personalised approach that supports borrowers navigating these uncharted waters. Our expertise allows us to assist customers effectively, helping them seize opportunities within this emerging market.

Change is inevitable, but preparation is key. Together, we can harness these new developments and drive the property market forward. This is an exciting time for growth, innovation, and success.

Credit: Craig Middleton – Mortgage Sales and Distribution Manager, Harpenden Building Society

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