Small Talk: A scheme to tackle the shortage of homes is having unintended results

The UK needs houses. It also needs vibrant high streets and space for local businesses and start-ups to grow and flourish

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The Independent Online

Take a look in any estate agent’s window, or read online, and you’ll spot rent rises and price hikes. There’s no doubt residential rents are soaring.

Using rent as a benchmark for how well supply is meeting demand, you will find that average residential rents are up nearly 12 per cent year on year – this at a time when general inflation is almost non-existent.  

It is, therefore, hardly surprising that ministers are keen to find ways of increasing the housing supply. The obvious answer is to build more houses – but for a number of reasons that’s just not happening. The UK is widely reported to be building about half of the houses we need to meet demand.

London and the South-east is most in need of new housing, but finding suitable land, free of restrictive planning protections like the green belt, is in short supply. As successive governments have discovered, seeking a workable solution to this problem is easier said than done. Most of these areas are also in key marginal constituencies, with strong local opposition to new building. And it has proved hard for politicians across the spectrum to overcome. 

In 2013, ministers rolled out the idea to remove the requirement for landlords to apply for planning permission to convert offices into new flats and houses to free up disused space. This was originally introduced on a temporary basis, due to expire in May 2016. The Government is now considering making the move permanent.

On paper this seems reasonable, but there is evidence the policy may be having sizeable unintended consequences for the availability of property for small business. The widening gap between residential and commercial property values in parts of London, the South-east, and in cities like Birmingham, Leeds and Manchester, has made converting offices to homes hugely attractive.

In a recent survey, well over half of Federation of Small Business (FSB) members in London we questioned said the availability of commercial space is critical to their business. Yet, some local authorities, such as Richmond, claim that almost a quarter of commercial space will be lost if all current conversion plans go ahead.

This conversion wave is also hitting other areas. For example, a recent Local Government Association (LGA) survey of 93 local authorities suggested that the policy had reduced the availability of office space within the local area, while the Central London Forward group estimates that 225,000sq m of office space could be lost in central London. That equates to the floor space for 47,000 workers.

This continuing depletion of commercial stock will drive up the cost of property for small businesses and could put some out of business. In addition, it will have knock-on effects on local jobs and communities, having a disastrous effect on the health of shops and high streets.

Clearly this can’t continue. The UK needs houses. It also needs vibrant high streets and space for local businesses and start-ups to grow and flourish. Local councils must have the time to assess their supply of small businesses’ space and put the protections available to them in place.

The policy also needs finessing to reduce the risk of negative impacts on small businesses. Any extension should be delayed until it is. Small firms facing eviction by greedy landlords need some form of safeguard to prevent them going under and the loss of much-needed local jobs.

Ultimately the Government needs to tackle the root of the problem by creating the right conditions for building new homes. It should focus on driving up overall supply of both residential and commercial property.

With only so much space to go around and rising costs, in cities like London there is a limit to how long we can reallocate or subdivide it. Small businesses should be prioritised – by giving them the opportunity to invest, they will get stronger, and so too will our economy.

Small Business Person of the Week: Adam Breeden, Founder, Bounce

At the beginning, I was certain the one thing I was not was an entrepreneur.

My journey in the hospitality business started as an assistant dishwasher, not senior enough to even operate the dishwasher, which left me only the task of scrubbing food from dirty plates. This is the bottom of the food chain in my business, and perhaps any business. But I loved it. I knew at university I had to be a restaurateur: someone whose art is creating one of the richest and most immersive retail experiences known, profoundly engaging every human sense.

My main leap came when I joined forces with my brother to launch The Lonsdale bar and restaurant in Notting Hill. We knew nothing, but had a vision to create an experience that exceeded all expectations. It was a hit, but also a huge learning curve, and mistakes were made that seem impossible to fathom now, but through dedication and a lot of effort, it worked.

In 2006, I co-founded All Star Lanes, at the time a new Social Entertainment Venue concept centred around 10-pin bowling, paving the way for and defining venues to come.

As is the case for most people, the great ideas aren’t necessarily the product of a singular lightbulb moment – for me the real opportunities came from first mastering my craft through sweat, passion and a vision for the highest standards of product execution.

It was in founding Bounce in 2012, my third venture in hospitality, where I discovered the best concept – a table-tennis bar and restaurant – and winning formula for growth. Bounce will be opening its second venue in Shoreditch in October, and its first international venue in Chicago in early 2016 and more to follow.

The key ingredient summed up simply? Be much better than you think you need to be, only accept excellence, and regardless of how far you think you need to go to be successful, push the boundaries of quality in your product. There is always room in any market for a better product.

The challenge to overcome is to understand that if you have drive and belief it’s not as hard as you think it is to succeed. You only need to know 50 per cent of what you plan to do. This is enough to leap into progressing any business, you’ll work the rest out.

David Prosser is away; Mike Cherry is policy director for the Federation of Small Business