IVBN: Local flexibility as a solution to vacant retail space
This column was originally written in Dutch. This is an English translation.
The housing crisis calls for boldness and political and administrative flexibility. Building homes above shops is a promising, sustainable solution. The fact that projects fail to get off the ground is not due to a lack of will, but to regulations, procedures and financial barriers.
By Judith Norbart, Director, IVBN
Anyone walking through Dutch city centres can see it for themselves: high streets are changing. City centres are taking on a new role: less single-use retail, more mixed-use development. It is precisely this trend that presents a significant opportunity for the housing market. Residential units above shops fit seamlessly into a city centre where living, working and amenities are increasingly coming together.
A solution that has already proven itself
The fact that living above shops works is not just a theory. Across the country, there are examples where vacant floors have been transformed into sought-after homes in recent years. The benefits are manifold: additional homes without taking up new space, a livelier city centre, a longer useful life for property, and a boost to the sustainability of existing property. For local authorities, this means densification in locations where infrastructure and amenities are already in place. For investors, it offers the opportunity to combine social returns with long-term value creation.
A valuable opportunity
Nevertheless, the scale on which residential development above retail premises is being realised lags behind its potential. This has little to do with a lack of initiative. On the contrary, property owners, investors and retailers are willing to invest in this form of transformation. Where the problem lies in practice is feasibility. Inner-city redevelopment requires bespoke solutions, whilst regulations and procedures are often based on standard development. This creates friction in a context where buildings differ significantly from one another in architectural, legal and functional terms.
Financial barriers
Financial viability is also under pressure. High construction costs and technical challenges, for example with listed and existing properties, make many projects vulnerable. Added to this are fiscal complexities, as well as pressure from VAT and stamp duty. If the potential return is then insufficient to cover these investments – for example, because there is limited scope for rent increases – socially desirable projects fail not due to a lack of demand, but because of the preconditions.
Political and administrative flexibility
This is precisely why political and administrative flexibility is essential. Not by throwing rules overboard, but by applying them more intelligently and in a context-sensitive manner. By allowing room for bespoke solutions, engaging in dialogue with project initiators at an early stage, and speeding up procedures where possible. Living above shops requires cooperation between local authorities, property owners and retail entrepreneurs from the very start of a project. And the sooner the parties find common ground, the greater the chance that something will actually get off the ground.
From potential to realisation
The call is clear. To make living above shops a serious part of the housing challenge, choices must be made. First and foremost, fiscal and legal conditions are needed that do not unnecessarily hinder the transformation. In addition, it requires an administrative approach that is not primarily focused on risk management, but on enabling solutions. And finally, it requires policy that does justice to the reality of inner-city regeneration and the role that long-term investors can play in it.
The potential lies literally above our shops. The question is not whether living above shops can contribute to the housing market. The question is whether, together – nationally, locally and within the market – we can demonstrate the flexibility needed to actually make use of this existing solution.