Housing: Hunt for homes above the shop: The success of pilot schemes should spur funding for the homeless, writes Paul Gosling

AN EXPERIMENTAL scheme to convert empty rooms over shops into flats for the homeless has proved so successful that it is set to double its funding from the Government in the next financial year. However, the scheme's co-ordinator warns that unless urgent action is taken, much of the money allocated for the current financial year will be left unspent.

The 'Living Over The Shop' scheme offers a comparatively simple way of providing accommodation for the homeless and great advantages to commercial landlords. Occupied flats act as a deterrent to burglars and vandals, putting life back into often deserted town and city centres. The shopowner receives the net rental income, after deduction of management fees.

Management responsibility is undertaken by a housing association, which also oversees the renovation of the property to make it habitable. The Government pays most of the capital costs, through grants separately awarded by the Department of the Environment, the Housing Corporation and City Challenge companies.

This year, the City Challenge areas had pounds 2m to spend on their schemes, and the Housing Corporation and DoE pounds 5m each. The DoE has agreed to increase its contribution to pounds 10m next year, and the Housing Corporation would also like to raise its support, subject to Treasury approval.

But according to Ann Petherick, national co-ordinator of the 'Living Over The Shop' programme, the Housing Corporation and DoE need to sort out their administration to make the scheme effective. Although the corporation has funding for 31 schemes, only six have been approved in the past year. She complains that the areas that have the money do not have the properties to convert, while the areas with the properties do not have the money. 'If they wanted to devise a system that couldn't work, they couldn't have done it better,' she said.

The corporation has now agreed to reallocate funds in a last-minute effort to spend the available money this year.

Ms Petherick complained that the system used by the DoE was also failing, and accused the DoE of being 'excessively wedded to competitive bidding'. She said it was so keen to keep down flat conversion costs that it has given local authorities unrealistically small sums to make the improvements. She believes that the DoE money will also be underspent, as councils realise that they are unable to do the conversions for the money allocated.

Hereford's council bid pounds 300,000 for flat conversions but had its application rejected as too expensive. In its view, the sum was the minimum needed to undertake reasonable conversions. Meanwhile, because grants are subject to a ceiling in each region, Newcastle's council was given pounds 67,000 for a scheme that needed pounds 141,500, forcing the council to underwrite the balance. Newcastle says its bid was only approved at all because of the low unit costs of the conversions.

Nevertheless, those councils, housing associations and landlords that are involved in the scheme are strongly committed to it. Martin MacDonald is development controller for the Irwell Valley Housing Association, which has overseen the conversion of empty rooms into flats in the Radcliffe area of Bury. He said: 'It provides added security for the shops underneath, and we want money now for another three projects. It's part of our association's aim to regenerate the town centre, and to bring life back into the centre after the shops have closed at night.'

The irony in Radcliffe, which will not be lost on many landlords, is that the flats are much easier to let than the shops. The six flats all have tenants waiting to move in. The shops underneath are more of a problem - one has had several tenants in recent months, while another is still vacant.

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