The government should work with businesses, including providing financial support, to convert unused office space into low-carbon housing. This would work towards a number of valuable short-term goals: alleviating the housing shortage in urban centres, increasing Britain’s overall stock of low-carbon homes, and providing financial relief to businesses and investors harmed by the sudden collapse of Britain’s office-space market (real estate plays a significant part in Britain’s pension investments, for example). More importantly, however, it could help the government play the role of environmental market-maker by providing construction firms with a meaningful financial incentive to retrain and certify in low-carbon domestic construction, with a view to expanding these techniques to the broader sector, including existing homes, along the lines of the Future Homes Standard.
This programme would begin by offering financial incentives to existing owners of office space willing to convert their property into housing. This could take the form of direct subsidies or a sizeable reduction in stamp duty on the sale of properties for conversion. If political risk was identified as a significant barrier to businesses engaging with the scheme, the government could offer periodically-reviewed guarantees along the lines of the assurances given to the energy industry: this may be particularly relevant given the large capital investments, long timescales and shared emphasis on decarbonisation involved.
Given the innate conservatism of the real-estate sector and the relatively frequent shifts in government climate policy (at least compared with the long timescale involved in real-estate development), these incentives should be introduced with ministerial support, a defined timescale and consultation with industry bodies. Eligibility for these subsidies should be clear enough to be understood by the public (to avoid allegations of nepotism) and limited in scope, focusing on the creation of new, low-carbon homes, avoiding project creep. Additionally, some reimbursement should be withheld until conversion of the property is complete, particularly for larger developments, so as to discourage delay and “white elephants”.
The government should also work with the construction industry to introduce measures that facilitate conversion and encourage skills-retention. These include updating and republishing standards for low-carbon housing and, where necessary, working with construction industry bodies to rapidly develop accreditation standards for low-carbon construction practices. Particularly given the disappointment felt by businesses which had invested in retraining for the Zero Carbon Homes standard, dropped in 2015, this may need to be approached with some degree of sensitivity.
Ministerial attention and pre-planning before the programme launches can also help to mitigate key risks, as well as facilitate improved outcomes (for example, by encouraging dialogue between estate agents, landlords and construction companies). This is in part because the project would cut across several sections and layers of government – notably the Department for Environment, Food & Rural Affairs, the Ministry of Housing, Communities & Local Government, the Department for Business, Energy & Industrial Strategy, the Treasury and local authorities – but also because different departments may approach the programme with different secondary objectives. For example, the government may wish to use this programme to expand and update its stock of social housing, though this is not a primary aim.
The government will have to establish and maintain clear rules for which properties are eligible for conversion – some modern office blocks may be architecturally unsuitable, due to centralised utilities or poor access to natural lighting in the centre of the building. Central government should discourage local authorities from overzealous use of Section 106 powers to require affordable housing: many offices exist in locations where housing supply is so limited that even relatively high rents can still improve housing accessibility. This all argues for clear ministerial ownership of the programme and significant interdepartmental planning before launch.
Successful developments would act as cornerstones for integrated communities, stimulating further investment and decarbonisation. This is because the new homes converted from offices would likely exist near to retained office spaces and the public transport links which serve them. Where good quality housing is available, living near work is desirable for many, as well as being carbon-friendly. Commuting involves walking or cycling rather than taking a car or train, and by reducing the load on public transport, encourages others to use mass transit services over private transportation. Good public transport links and central locations mean that social, leisure and cultural activities are readily available and easy-to-access.
The long-term goal of this programme should be to provide an incubator for construction businesses to acquire the skills (and accreditation) for low carbon conversion for use in the broader domestic construction sector. This skills gap is one of the five urgent areas for concern identified in the Committee on Climate Change’s (CCC) report on UK housing from 2019. Greater market availability of experienced specialists would also help lower the significant costs environmentally-minded owners face in retrofitting existing properties. These costs act as a significant barrier to the 15% energy-use reduction in existing properties by 2030 that the CCC identifies as a necessary intermediate target.
The accelerated abandonment of conventional office spaces is likely to be one of the longest lasting and most significant effects of the COVID-19 crisis. Unmanaged, this issue will only exacerbate the economic hardship that the UK will doubtless face in the years ahead. However, empty buildings in some of Britain’s most housing-undersupplied areas provide an enormous opportunity not only to create new homes, but act as an incubator for sector-wide skills and practices which will allow Britain to capitalise on her climate ambitions.