London retail landlords could be sitting on goldmine thanks to Budget

The owners of some of London’s High Street buildings could be sitting on a “goldmine” with scope for over 200,000 new homes, thanks to a planning policy quietly mentioned in the Budget, it has emerged.

The government said it wants to make sure scarce land is as efficiently used as possible by consulting on introducing policy changes “to support the conversion of empty space above High Street shops”.

Property agent Colliers International said that there are 72,242 shop units in central London. “Assuming there are on average 3 dwellings above each of these, there are 216,000 apartments altogether to be created potentially,” a company spokesman added.

However, he pointed out that some of the properties may already include homes and have no room for more development.

Landlords of stores in the capital have typically considered them stable assets which have benefited from rent rises and steady occupier demand. But the rise of online retailers has made letting some of them more difficult in recent years.

However, property experts on Thursday predicted these buildings would be viewed as more attractive to investors that will now eye building flats above them.

Gregor Wallace, of investment group Coldwell Banker Commerical, said: “Landlords could be sitting on a goldmine.”

Adam Challis, head of residential research at JLL, said: “Retail investors may see the government’s announcement as an unexpected boost to property values, particularly if the space has been underutilised but is otherwise in good condition.”