Closing time for Living Over The Shop project

Government plans to convert unused space above shops into hundreds of thousands of homes has suffered a serious setback after its own research warned the project could be too risky, Inside Housing has learned.

And in a further blow to the programme, the only organisation dedicated to championing the project has been forced to close after its government funding dried up.

Consultancy Grant Thornton was commissioned by the Office of the Deputy Prime Minister to draw up plans for a new agency that would advise on how empty commercial space could be converted into up to 300,000 homes.

Its unpublished report, seen by Inside Housing, revealed that despite the ‘significant potential' of the project there was little appetite among commercial organisations or housing associations to act.

The total cost of running an advisory agency for three years would be £2 million, it concluded, there were significant risks and the costs could outweigh the benefits.

‘Our study has identified the significant potential for the use of under-utilised assets above shops,' the report said. ‘This potential will be hard to release and the costs may be prohibitive. The market is wary of the programme.'

Ann Petherick, the former project director of independent organisation Living Over The Shop, said she had been forced to close the organisation in June.

‘I am getting owners of properties approaching me and I am having to turn them away. There is nothing I can do to help them as I haven't got the resources.

The whole thing has collapsed in a heap.'

Ms Petherick said she was now waiting to hear whether the ODPM had accepted her offer to come up with an alternative model for an advisory agent.

Ian Fletcher, director of residential property at the British Property Federation, said the need for an advisory agency was identified by a task group led by former regeneration minister Lord Rooker.

‘From the commercial property occupiers it is predominantly a hassle to bring property forward and you need an element of hand holding to take the hassle off the commercial organisations' hands,' he said.

An ODPM spokesperson said the department recognised that flats above shops could help revive town centre living.

‘There are however a number of barriers preventing this potential from being realised, including the complex ownership patterns in high street property,' he said.

The ODPM was still examining how those barriers might be overcome, he added.