Brokers react to the housing secretary's latest plan
The Secretary of State for Levelling Up, Housing and Communities, Michael Gove, has announced his intention to relax planning rules in England in an attempt to build more homes.
This would be achieved by making it easier for developers to convert vacant retail premises and betting shops into houses and flats.
Mortgage Introducer sought to identify property experts’ views on the proposals.
Political desperation
John Choong (pictured), equity research analyst at Investing Reviews, said Gove’s proposal reeks of political desperation, as the Conservative government attempts to claw its way back in the polls.
“It is more likely than not that the plan is yet another drop in the bucket of empty promises given Michael Gove’s anti-development actions as of late,” he said.
Choong added that the housing secretary vetoed Marks and Spencer’s proposal to revamp its flagship Oxford Street store in an attempt to reinvigorate the dying high street in London.
“The government is not making housebuilding any easier for developers, either; new rules that are set to take effect in 2025 require housebuilders to install better insulation, alongside technology such as solar panels, all while having to pay higher taxes on profits,” Choong said.
These moves, Choong added, are only going to further disincentivise housebuilders from building more homes; as such, he believes Gove’s comments seem more like political PR than genuine action.
Laura Bairstow, founder at The Mortgage Masters, said while in theory this may sound like a good idea, many lenders do not like to lend on properties that are above or close to business premises.
“Lenders consider borrowers on this type of property higher risk, resulting in fewer options when it comes to deals and products available,” she added.
Potential buyers, Bairstow said, may therefore struggle to get a mortgage, or end up paying higher interest rates for the privilege.
Win-win
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management, said making the conversion of currently unused buildings easier is a win-win.
“It creates more housing for people and regenerates property that otherwise would sit vacant, and boarded-up shops are never going to be a good thing for an area,” he said.
On the other side of the coin though, Taylor-Barr said there is a limit – no-one wants to see all urban centres just become a glut of new housing with no shops, bars, or cafes.
Graham Cox, founder at Self Employed Mortgage Hub, said making it easier for developers to convert empty retail premises and betting shops into housing is a welcome development.
“The high street has changed irrevocably over the past decade, and there are only so many coffee shops and estate agents a town can bear,” he said.
Allowing more mixed-use development, Cox said, could help fill the gap when outlets stand empty.
“That said, it is only part of the solution; we need more house building on both the green and brown belts,” he added.
Paul Welch, founder and chief executive at Large Mortgage Loans, said everyone should have the chance to live in a home that they can call their own, whether that is through 100% ownership, part ownership or even rental.
“Converting empty city centre office space is a great idea in theory, but we must ensure these properties are affordable,” he said.
This could be achieved, Welch said, through partial funding by local authorities, providing more social or subsidised housing to help those who cannot afford to buy a home.
“This would not only give housebuilders a boost and provide local authorities with an income from rental and a return on their investment, but we could potentially see greater footfall into city centres which will help retailers, so the benefits could be widespread,” he added.
However, first things first, Welch said the government needs to bring inflation under control otherwise we will continue to have a situation whereby people struggle to afford a mortgage, and so will not be able to buy these converted properties, even if they wanted and desperately needed to.
What is your view on the housing secretary’s latest proposal to relax planning laws? Let us know in the comment section below.
