It is a perfect example of ‘be careful what you wish for’.
Few in the industry held Robert Jenrick in particularly high regard and when Michael Gove replaced him with the larger remit of secretary of state for levelling up, housing and communities last September, the initial industry reaction was positive. This was, after all, a former shadow housing minister, a man renowned for his clarity of thinking and breadth of vision, someone who had the smarts to swiftly jettison Jenrick’s “radical planning reform”. But that was then.
Seven months on and Gove is proving to be less friend, more foe, although he still has his fans – PW columnist Steve Norris for one (who says he was “astonished” Gove got housebuilders to stump up £2bn to pay for their cladding liabilities, “but that’s the measure of the man”).
As well as the Building Safety Pledge, Gove has also, of course, announced the expansion of the Building Safety Levy to raise a further £3bn and a £7bn developer levy to drive council housing development.
Tot everything up and that is quite a chunk of change he is expecting the industry to cough up (while government seems to be paying nada).
At least there is a certain logic to his housing initiatives. What logic is there to his plans to force landlords to let retail units that have been vacant for more than six months?
The nationals would have us believe that under the plans, new life will be breathed into empty units up and down the land, and who doesn’t want all those voids to be filled? The question is: what will they be filled with?
There is vague talk of community groups and smaller businesses taking over units, but the fear is that we will just see more pound stores and charity shops. Most high streets don’t need any more pound stores or charity shops. They don’t need any more retail full stop. The rise of online retail has seen to that.
As ever, the government is looking down the wrong end of the telescope, and there is now a very real danger that we’ll see an explosion of superfluous, low-grade retail, rather than the vibrant, mixed-use development our high streets need.
Instead of resorting to cheap, vote-winning tactics, the government would do well to ask why all this retail space is vacant in the first place. The short answer is that there is still way too much of it. The rightsizing of retail, accelerated by the pandemic, needs to run its course. As Landsec chief executive Mark Allan notes, the UK still has 25% more than it requires.
Unsurprisingly, the plans have not been universally welcomed. As the BRC’s Dominic Curran argues, they do not address the underlying cause of empty shops: the business rates burden, which is now at an all-time high in England.The BPF echoes his point and adds that there are potential legal issues, including the rights of existing tenants that have chosen to vacate but still have leases. It also points out that empty properties may not be lettable.
It is right. The notion that landlords are wilfully sitting on empty units is just bonkers. They would let the space if they could. A lot of it is cheap, if not free.
If Gove really wants to rescue the high street, he needs to fix the broken business rates system, which everyone in the industry agrees is hopelessly outdated and not fit for purpose.
In the meantime, expect more announcements from him – and be ready with the reddies.