Property: Your new abode above the awnings

Homes over shops are making a comeback. Felicity Cannell looks at initiatives to fill unused space

They are considered the lower end of the housing market - squashed into the empty space above the take-away restaurant, or above the mini- cab office with the flashing green light, and telephones and car engines all night long. But flats over shops are proving ideal homes for single people - and there are masses of them, often overlooked by owners, local authorities and even developers.

The Department of the Environment and the Housing Corporation are encouraging the development of housing over shops to breathe new life into urban areas, with advantages for both landlords and tenants.

Police, property owners and residents believe that homes over shops can make town centres safer places to live. Where there is a policy to fill the upper floors with residents, crime is reported to be falling. One surprising finding by the Joseph Rowntree Foundation (JRF), in its "Crime on the Homefront" survey, is that people living above shops feel as safe, or even safer, there than anywhere they have lived - safer, even, than the traditional suburban semi.

Anthony Fletcher, founder of the Empty Homes Agency, says: "The problem of these wasted homes has been developing for decades. The move away from town centres and better stock control have left many shopping streets with vacant floors that were once occupied by staff or used for storage."

Housing associations are demonstrating to retailers large and small the benefits of having residents above their premises. Hyde Housing Association has been working in Deptford Broadway, south London, to provide homes to people who would not generally qualify for housing help. The area is typical - secondary shops with redundant upper floors, surrounded by 95 per cent social housing.

"Shop owners in such areas feel they are facing a Catch 22 situation," says Catherine Kell of Hyde Housing. "They don't want what they see as typical single social housing tenants - people with drug or mental health problems, who may wreck business by hanging around outside, or even break in at night. Butthese retailers need to let the flats above to support their business, particularly single traders. We are putting in tenants who are economically active. There are a lot of people who traditionally don't get help, such as those who have just left college. They may have a job, but they don't want a mortgage, and will spend money locally." So retailers get extra income and customers for their businesses.

Hyde Housing is picking up a fair amount of property in Deptford, but elsewhere in the country housing associations are struggling to get hold of it. Matthew Hart, of ML Builders, says: "The associations are coming to us to help them find this space. There is massive potential if everyone involved - retailers, landlords, developers - realises the advantages."

The housing associations will consider such property from any source - private individuals or major consortiums - and will find suitable tenants and pay a guaranteed rent. The property has to meet gas, fire and safety regulations, and be ready for immediate letting. In some cases housing associations will improve the property themselves. Hyde Housing will spend up to pounds 10,000 on a kitchen, bathroom or central heating, for example.

"If this all sounds too good to be true, don't worry. There is no trick," says Mike Viney of Hyde leasing & Management. "We receive money from the government every year specifically to help landlords bring empty properties back into use."

Martins Newsagents is assessing the vacant space over its shops. The company was paying pounds 250,000 in empty property rates, but found it could make extra annual income of pounds 400,000 in rent, which is now rolling in.

West Hampstead Housing Association has successfully converted McDonald's, Blockbuster Video and Threshers Wine Merchants to the idea of tenanting their upper spaces. Very useful - tenants can pop downstairs for a take- away, a bottle of wine and a video to watch. These retailers agree that having more "eyes on the street" could deter anti-social behaviour and make people using the street feel safer. A resident above a shop may feel some responsibility for the premises below and be an informal caretaker.

However, not all retailers are convinced. Banks and building societies are concerned about tenants who may break in through the ceiling. Indeed, 7 per cent of burglaries do occur through the ceiling - but only through empty properties. There are no recorded instances of residents breaking in.

Insurance companies, too, are worried about the type of occupant and the risks posed by a succession of short-term tenants, but at the same time they charge high premiums on unoccupied property. In the JRF research, no insurer could offer any evidence to support its concerns over tenants, but every insurer saw empty property as exposed to the risks of theft, arson and squatting.

For residents, another security advantage is that many "opportunist" burglaries in residential streets occur at around 4pm when owners are at work, picking up children or shopping. In commercial areas there are plenty of eyes at that time.

Lorraine, with her young daughter, found her new home through West Hampstead HA, over a shop in Ealing. She became homeless after being evicted from a private flat when she complained about the conditions. "I feel secure and I like the privacy and space. I know it's temporary but it is a long lease."

Another obstacle has always been the difficulty of getting a mortgage to buy one of these homes. In the early 1990s it was nearly impossible in retail areas hit by recession, but now lenders appreciate the need. Samantha Davis, of Woolwich Building Society, says: "There is no problem with flats over shops, as long as the use of the premises isn't detrimental to the enjoyment of the flat, which must be completely separate from the shop unit."

Flats over empty shops may be a problem as there is no guarantee the premises won't turn into a wine bar - or worse. Nancy Bryce lives in a flat in north London over a bar which over the years has changed into a strip club. "Every Friday and Saturday night the doorbell rings when customers, rather worse for wear, assume the flats are filled with prostitutes!"

But with the shortage of space in town centres, flats above shops achieve prices similar to other flats. And with many streets suffering the effects of massive out-of-town shopping centres, town planners look favourably on conversions from commercial to residential use.

q Potential landlords and tenants should contact The Housing Corporation (tel: 0171 393 2000) or the Empty Homes Agency (tel: 0171 828 6288).