22nd Jul 2016

Changing Rooms

Next time you wander down your local high street, you might see some empty shop units – there are unfortunately currently still quite a few. Now look above those ground floor shops, above both the empty ones and the thriving businesses - you’ll see first and second floors most probably disused or just used as storage by the business owner downstairs. It has been suggested that this empty upstairs space could be converted into residential flats and help with the housing need. It, of course, follows that more housing means more footfall that helps the local economy.

So, why aren’t these empty floors being converted and used for housing? Firstly, most landlords let the building as a whole so a shop tenant will be paying rent for the whole, a landlord is receiving rent regardless. Secondly, most leases won’t allow underletting of part, so a tenant couldn’t let the upstairs separate from their business downstairs.

For this to be a viable solution in the future, then incentives need to be offered to landlords. Either to encourage them to let ground floor units separately and convert the upstairs or for them to offer more flexible letting terms to allow a tenant to underlet the upper floors. Pension changes would also need to be considered, currently they don’t allow residential property to be invested in a pension scheme.

All food for thought that may help local businesses thrive in the long run.

Written by Sophie Barton of Berwins Solicitors.

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