More than 65 high streets will get funding to transform disused and run-down buildings into new homes, shops, offices and community spaces.

Transforming old shops into new homes may or may not be a good idea. It’s a good idea if it’s profitable, more value is created by the change of use than the change of use costs. It’s a bad idea if it’s not profitable.

So why in buggery would we subsidise it?

28 thoughts on “Erm, why?”

  1. Great Reset Tim.

    The Globos want high-density urban living. They want the town/country cleaned out–poss for their country estates–and surviving plebs pushed into urban squalor. Imagine shanty towns built by IKEA. Where you live in the sight sound and stink of your crappy neighbours through paper-thin walls.And imported migrant gangs rule by machete. Already happening in parts of Dublin I understand.

    Needless to say Yours Truly will not be among the inhabitants.

  2. “community spaces”

    That’ll be where the money goes. Arts/youth projects with a couple of civil servants with art degrees achieving absolutely nothing.

  3. The High streets were killed by a variety of local authority measures:

    1. Difficult to park – reduction of on-street parking, introduction of charges
    2. Permission for large out-of-town supermarkets – with oodles of free parking – to be built
    3. Reduced or free business rates for ‘charity’ shops
    4. Huge business rates

    … to mention just 4.

  4. Money for this, money for that.

    At the same time they are squeezing businesses for more taxes. For a party tarred with the brush of ‘giving tax breaks to their mates’ they have;

    Hugely reduced the annual amount people can put in their pensions and get tax relief
    Introduced a penal tax rate on people earning £100k – £125k
    Introduced a penal tax rate on people claiming Child Benefit who earn above £50k (which manages to catch one parent earning £51k but not two parents who each earn £50k)
    Increased tax rates on dividends (by 8.25% by next April)
    Given no help at all during the ‘lockdowns’ to business owners who dared to pay themselves by way of dividend
    Extended IR35 which has resulted in a shortage of contractors prepared to engage with the public sector or big businesses
    Hoicked up CGT rates on let properties
    Changed the rules so that CGT must be paid within 28 days
    Changed the rules on interest deductions on let properties so that it’s now possible to have a tax bill even if you don’t make a profit
    Reduced tax breaks for self-employed people who incorporate their business
    Eliminated tax relief for the companies which acquire those businesses
    Probably others I’ve forgotten.

    And there are now threats to CGT rates and pension tax relief.

    And I can’t see any of those being big tax revenue earners. They are the sort of spite changes you’d expect from Labour.

  5. Bloke in North Korea (Germany province)

    “a couple of civil servants with art degrees achieving absolutely nothing.”

    couple of thousand civil servants, you mean. And don’t forget the gender/grievance/media studies grads in addition to trad arts.

  6. Bloke in North Dorset

    “ They are the sort of spite changes you’d expect from Labour.”

    If your only interest is being in power for the sake of being in power, stealing your opponents’ policies is one way of going about it.

  7. So why in buggery would we subsidise it?

    I think it’s called ‘nudge’ money. Ditto the heat pump grants.

  8. Witchie,

    It’s not just all that. There are places like Hungerford that don’t do any of that, and used to have a decent selection of shops and they’ve nearly all gone.

    The way that women work now, improved mobility and the internet have changed retail. Town centres have been squeezed at all ends. At the low end, women can now buy basic knickers in Sainsbury’s when shopping. And at the higher end, if a woman wants a new outfit, she’ll take a trip to a major retail hub (like Manchester, Milton Keynes, Bath*, Reading) where she can get a wider choice. And most stuff that blokes want is online anyway.

    * Bath has more retail space than it’s ever had.

  9. The Original Jonathan

    When I was a city councillor 20 years ago we were fighting against developers destroying the high street by converting shops into residential. There’s no need to subsidise something people are falling over each other to do.

  10. The odd thing is so many of the retail premises were actually built as residential in the first place. The ground floor was converted to a shop or the shop was built out over the front garden with a flat roof over. It was done to satisfy the increasing demand for retail & commercial premises. So it’s just reversing the process as demand decreases.

  11. So why in buggery would we subsidise it?

    It’s important not to over-think this type of issue and to keep in mind that elected politicians know nothing much about anything outside politics.

    The process is simplicity itself:
    Such and such a policy is thought desirable
    Let’s throw some money at it.

    Above all let’s not consider what might happen if:
    We let well alone
    We relax regulations that might favour a desired outcome.

    In a nutshell, tax and interfere are the watchwords.

  12. “Changed the rules on interest deductions on let properties so that it’s now possible to have a tax bill even if you don’t make a profit”

    Now that I’m strongly in favour of. There’s a difference between a business that requires lending finance & BTL, which is simply leveraging preferential access to credit then making money out of it by using it to buy property. You want to be a landlord, do it with your own money.

  13. BIS,

    “The odd thing is so many of the retail premises were actually built as residential in the first place. The ground floor was converted to a shop or the shop was built out over the front garden with a flat roof over. It was done to satisfy the increasing demand for retail & commercial premises. So it’s just reversing the process as demand decreases.”

    Yeah, but then you have the NIMBYs to deal with. People would rather have an empty shop covered in fly posters than have a home for a family to move in. They’re absolutely insane.

    I would bulldoze half of Swindon town centre and turn it into housing. The number of empty units and charity shops is out of hand.

  14. @BiS

    “There’s a difference between a business that requires lending finance & BTL”

    What’s the difference? Why is it different to borrow money to buy an office from which you provide (say) advisory services rather than to buy a block of flats where the service you supply is providing a place to live?

  15. BiND

    “If your only interest is being in power for the sake of being in power, stealing your opponents’ policies is one way of going about it.”

    Dat true.

    I saw an interesting YouTube video about why, if you’re about to open the second petrol station in a town, you should open it right next door to the existing one.

    If there’s a gap, you’re competing for the middle ground. If you’re next door to each other (politically or as a petrol station) you’ve probably got everything to the right (or left) of you and might snaffle some from the other side.

  16. Andrew C
    The punters are reassured the prices are right. Gas stations don’t start a price war, they tacitly collude.
    The same logic applies double for any niche retail. The two shops in town for e.g. yachties, mountaineers, mobility aids, posh wine, not to mention barbers and bookmakers, will be right next to each other.

  17. @Andrew C
    “What’s the difference?”
    Well I suppose it whether value is being created. Tax breaks should be given to incentivise behaviour the is of general benefit. Your advisory service is doing something that is value. The advice is the core of the business not the ownership of the building it’s done in. Letting property you already own creates value because there’s more value than when it was unoccupied. Building property to let certainly does. Even if it’s done with a proportion of borrowed money. We all got richer. I’m not so sure BTL is the same thing. BTL’ers compete for the amount of available credit. Compete in the housing market for existing properties. Maybe there’s a small amount of value being created from employment flexibility. Being able to rent rather than buy when moving for work. But what else? Basically it’s just renting out the money that’s been borrowed. Why should you get tax relief on the interest to do that? The interest payments are integral with the price of the money.

  18. There is no difference between the value created by rental office space or rental housing. In both cases a space as a service is being provided to people and companies who either cannot or do not want to buy real estate. Both providers of commercial and residential real estate use debt to enhance their returns.

  19. @BiS

    BTL is no different than any other business proposition. My wife was a small business owner, therefore no pension other than Social Security. BTL is her pension. She needed it to be a business because of liability.

    Interest is a business expense as a result. Banks also charge a higher interest rate if you don’t live in the home you buy. In the US, the government also charges a high “passive income” rate on any profit.

    The benefit for the public at large is a much more flexible housing market. One is that you do long term leases instead of month to month rent. This gives stability to both sides of the lease.

    There are a lot of reasons people rent rather than buy. We have had tenants that don’t have credit or down payment to buy, military people on controlled tours, and folks that don’t want the hassle of ownership.

    In the end it is no different than the commercial real estate market. The only difference is the leases tend to be shorter. The government interference is about the same; especially in California.

  20. The reason why money is needed is because only the government can force property owners to sell up.

    Let’s say you have a dying high street, and a developer wants to knock it all down and build some nice houses instead. But one landlord right in the middle of the row refuses to sell, at any price. The developer can’t proceed.

    Now get the govt to step in instead, and they can issue a compulsory purchase order for the whole block. Stubborn landlord is forced to sell, and the development can proceed.

    A free-market way to achieve this is to allow private actors to assert compulsory purchase too. Singapore has this system (last time I checked): if you can get 80% of owners to agree to a sale, then the last 20% are forced to sell too.

  21. @MC
    I didn’t say there was a “difference between the value created by rental office space or rental housing.”
    Andrew C was talking about a business buying its office for its own use.
    And I’m quite on build to let. That’s how much of the property BTL’ers are keen on were built. I’m descended from someone built an entire side of a London street (entire but short 🙁 ) on that basis. But he did it with his own money, not borrowed. Actually I’m very keen on equity as well. The risk stays with the risk takers. Rather than being on the banks. Which ultimately means the taxpayer.

  22. “Tax breaks should be given to incentivise behaviour the is of general benefit.”

    Normally, if one is running a business, then business profit is business income less business cost. That’s it.

    And this distorted interest rule applies only to personal BTL, not corporate of exactly the same nature. Ie, nothing really to do with incentivising behaviour at all. Unless the incentive being pushed is to incorporate…

  23. One might opine,PF, if one wants the benefits of being a business, run it as a business. Why don’t they?

  24. But they do. All we are talking about in that case is whether the BTL is run as an unincorporated business as opposed to as an incorporated business. Which is nothing more than a legal/tax distinction. In the business sense, there is no commercial difference.

  25. At the risk of starting a flame war (which it will), and rocking my inner MW…

    Land Value Tax with a flat Income Tax (includes corporation) plus abolishing all the ‘distorions’ and crap taxes like UBR, VAT, NI, inheritance and SDLT sorts the problem nicely.

  26. BiS might have a point about someone who rents out a property they own and re-mortgages it to get some money out of it for something like a holiday. But when someone has ten properties rented out and mortgages them to be able to invest in more properties then the point is a bit weaker.

  27. @BiS – lots of businesses use debt. BTL use of debt is no different to any other business.

    BiS might have a point about someone who rents out a property they own and re-mortgages it to get some money out of it for something like a holiday.

    Lots of businesses use debt to pay dividends. Which may be used for holidays.

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