This has led to a growing concern that more homes need to be built in the UK. But, why not convert high street retail space into residential housing?

As the growth of online retail continues, the planning minister Nick Boles has suggested that failing high street shops should be converted to housing to save town centres and promote affordable homes within the community.

By empowering local councils to differentiate between prime and non-essential retail space, Boles hopes to concentrate shopping and community life in town centres. At the same time, additional housing would be provided in retail locations no longer deemed viable. According to ONS UK figures from April, an estimated 14 per cent of high street shops are empty. The proposed solution presents towns with the opportunity to shape and adapt their high streets to current market conditions as well as increasing their customer base.

There are fears among local councils that if the proposed measures were introduced, a slow conversion of high street properties to housing would be difficult to reverse. They surmise that landlords would rent their properties purely to maximise potential rental revenue, as rental properties could be potentially more lucrative. But on the flip side, if we do not go down this route, there is a danger that these retail spaces would simply fall into decline, creating areas of deprivation in our towns and cities.

Many argue that market statistics do not show the level of multi-channel buying among consumers. Just because retailer X is reporting online shopping being up by, say 30 per cent, it does not necessarily mean those online customers have abandoned shopping in retailer Y's high street stores. For example, while Amazon may dominate the online retail market, their main base of products is made up of non-wearable items, with high street stores for clothing remaining popular. In addition, many companies have tailored services to straddle both online and physical locations, with the store collection of items purchased online becoming a popular option for those whose schedules make home delivery difficult.

It is therefore important not to generalise when discussing the success of the high street as a business model, as many towns still maintain busy retail centres. Two years on from Mary Portas’s independent review on the future of the high street, a report by the Department for Communities and Local Government offers an alternative approach.

Here, the emphasis is on reshaping high streets rather than moving away from them. The report states ‘neither internet shopping nor out of town retail are going away, and both have important roles in offering consumers choice and competition’. However, the high street can offer more in the form of ‘a centre to a community, where people can gather for cultural, entertainment and social activities as well as shopping.’

Some councils have suggested alternative measures to revitalise high streets, for example Cheshire’s ‘Free after Three’ program which waives parking costs after 3pm in order to attract those who might be put off by high parking prices.

The government must maintain a balance between a need for more housing and continued support for businesses in town centres; the proposal to relax restrictions on the conversion of retail space to housing appears to be a viable option.

By Aldermore's Commercial Mortgages Managing Director Rob Lankey