In looking at council tax data on the number of properties which are long term empty and unfurnished a significant number are flats above shops. This is often because access to the flat is through the shop which potentially generates security and privacy issues for both the shop and the flat occupier. If the flat has a kitchen and bathroom but is only used by the shop for storage it couldremain on the council tax  long term empty and unfurnished list indefinitely.

HMRC already offer 100% recovery of refurbishment costs   for bringing empty flats above shops back into use by offsetting the refurbishment costs against income or corporation tax liabilities. This includes the costs associated with providing separate access / utility arrangements. Clearly there is a significant and under utilised stock of affordable housing in our high streets. If owners could be encouraged to  take up the flat conversion allowances this stock could provide a fairly easy win from a local authorities NHB revenue calculation point of view.

The main reasons I find that people don't use this capital allowance scheme is because (a) they are not aware of it and (b) they don't have the initial capital to undertake the refurbishment works. To overcome the latter objection I  wondered  if anyone had looked  at offering a 0% or low interest secired loans  along the lines of the Kent No use empty scheme but with the specific aim of bringing empty flats above shops back into use. Once a council finds money for loan capital it is fairly neutral from an accounting  point of view as money lent out on a loan is also money owed to the council which will be recovered in due course. The real cost is the lost interest from a 0% or subsidised scheme. Has anyone made the argument that the revenue generated from the NHB and collection of Council Tax  on flats above shops would be sufficient to offset  the lost interest costs on a 0% loan scheme?

This kind of loan scheme would also provide practical support for our  high street retailers as it would allow shop owners / occupiers to offset the refurbishment costs against any income / corporation tax liabilities, and potentially provide additional and valuable source of income for little cost to themselves. 

I would be interested in hearing from anyone who has set up a loan scheme specifically for this purpose  already or is thinking about doing it.

I have also been looking  at securing loan capital for this type of loan scheme from supermarket and other retailers wanting to build in edge of centre and out of centre locations via S106 agreements. This would effectivley require As part of retail impact assessment negotiations supermarkets to contribute loan capital to a fund aimed at bringing empty shops / empty flats above them back into use. An argument could potentially be mounted that additional rental income from bringing empty flats above shops back into use  helps to make town centre retailing more viable, and would therefore help to sustain the vitality and viability of an existing town centre, the main thrust of PPS 4 when determining out of centre planning applications. However because of the latest Community Infrastructure Levy Regulations it will need to be an agreed policy decision of the council to securing funding for High street shops/ flats in this way. Has anybody had any experience of successfully raising funding using this kind of approach?