The Living over the Shop Scheme has not had a dramatic effect on rental supply. Edel Morgan finds out why

Hopes were high that the Living over the Shop Scheme (LOTS) would unlock the residential potential of swathes of vacant upper storey space over retail premises in Ireland's cities when it was was launched in April 2001.

However, the scheme has so far attracted a paltry 28 planning applications nationwide, according to Department of the Environment figures - and has made negligible impact on the market for city centre residential accommodation.

Introduced by the Minister for Housing and Urban Renewal to boost the supply of residential accommodation in Dublin, Cork, Galway, Limerick and Waterford, the 28 applications received so far are in respect of 129 dwellings.

The failure of a previous Living Over the Shop scheme introduced in 1994 was attributed to an inadequate advertising campaign to promote awareness and the that it did not offer new build incentives where extra storeys are needed to restore the streetscape, where a replacement building is required in place of one that received a dangerous building order or where extensions are needed to facilitate access to residential accommodation.

This time around several of the local authorities involved mounted comprehensive advertising offensives and new build incentives have been available.Dublin City Council built six newly remodelled apartments over shops on numbers 3 and 4 Capel Street, Dublin 1 in a bid to persuade city shop owners to convert the hidden stock of property often lying idle and derelict on their upper floors.

The target was to create up to 2,000 residential units in inner city areas stretching from Amiens Street to Inchicore. So what went wrong?

"A lot of it is to do with the fear element," says Helen McNamara, administration officer of Dublin City Council's Economic and Development Unit.

"The owners of these buildings are not developers. They are not aware that if they spend €500,000-€700,000 on the building that they will get a good return on their money in many cases."

The solution, she believes, is the recent formation by Dublin City Council of an advisory team which will provide a point of contact with interested individuals.

"They will give them an indication of ballpark building costs, the nature of the work needed to make a building suitable and the likely return on their investment.They will also tell people if their building is suitable for conversion." (Preferred minimum floor area for residential units is 53.9 sq m, or 580 sq ft, although consideration is given to smaller units).

This team is a relatively new manifestation and has a panel of architects, quantity surveyors and property valuers on hand to inspect properties and advise.

The lack of take-up of the LOTS scheme is partly down to the fact that many buildings are owned by absentee landlords who collect rents for the ground floor retail unit "but are not particularly interested in the upper floors". Providing access to residential units may also be an issue for some. "They may be afraid it will mean taking space from the retail area but often with clever design the small amount of space lost to the retail area can be recouped with better use of the existing space." In Dublin, Capel Street is regarded as one of the most successful LOTS streets although its rejuvenation can also be attributed to other urban renewal schemes.

Gerry Folan, a Dublin City Council project manager for Inchicore, says the impact of LOTS has been "pretty limited" in his area. "There are two clear examples of where it has been achieved on the South Circular Road but it hasn't really taken off. There is a difficulty over dual access which involves providing a clarity of separation of shop and residence. Also it can be more difficult finding suitable premises in outer city areas. The take up is not necessary as quick as in the inner city."

In Inchicore village, there are examples of building "in long standing ownership where the owners are reluctant to change or move on. There may have once been commercial usage but this is no longer in evidence in some cases."

But he is optimistic that this is a temporary stumbling block. "New development is emerging in Inchicore village, part of which is incentivised. This level of change will bring about more demand and will attract more people in to the area."