As the mercury rises, 89,500 commercial conversions could become uninhabitable

London, 4^th September 2024

Following the relaxation of planning legislation in March to allow commercial buildings to be converted into new homes more easily, Zurich UK warns that conversions need to be done properly and a surge in poorly converted offices could create homes unfit for future climate conditions.

While 2024’s summer may have felt brief and fleeting, temperatures across Europe have reached sweltering sustained temperatures – continuing a pattern of higher maximum temperatures and longer warm spells in recent years.

And this wasn’t a fluke – the Met Office’s State of the UK Climate report lists 2022 and 2023 as the first and second warmest years on record respectively, with the top ten warmest years since 1884 all occurring after 2002.

Government planning data shows applications to convert commercial offices into residential units in England increased from 1,025 in 2022 to 1,235 in 2023 - a jump of 20%.¹ This follows a previous 20% applications boost between 2020 and 2021, as developers snapped up pandemic-vacated workplaces. Residential conversion applications include those from use class E - commercial, business and services - and includes offices, banks, restaurants and shops.

After announcing the intention to build 1.5 million new homes over the new few years, adding to the UK’s housing stock is a priority for the Government. However, while converting unused and underutilised building into housing stock has merits there are concerns that poorly designed and built conversions, which lack appropriate ventilation, cooling systems and external shading, could create swathes of homes which are vulnerable to more frequent heatwaves and hotter UK summers. With many commercial buildings located in heavily built-up concrete areas they are also more exposed to the ‘urban heat island’ effect, where temperatures are hotter and flash floods from heavy downpours are a higher risk.

As well as the risks of overheating, Zurich sees a high volume of escape-of-water claims from poorly designed office-to-residential conversions, with one of the most frequent causes being the failure of substandard plumbing systems or in buildings simply not designed to accommodate dozens of kitchens and bathrooms. Additional UCL research shows that these conversions affect vulnerable people disproportionately and can exacerbate existing inequalities, impacting occupiers' wellbeing and quality of life.

Research by academics at The Grantham Research Institute on Climate Change and the Environment at LSE found half of all UK homes are at risk of overheating, with this projected to increase to 90% of all homes under a 2°C global warming scenario. While building regulations now address the risk of overheating in new-builds, existing buildings are excluded – despite the UK having one of the oldest and most inefficient building stocks in Europe.

Inefficiency is not the only concern; homes that are not resistant to heatwaves also pose a health risk. The Climate Change Committee estimate heat-related deaths in the UK will increase around 250% by the 2050s.

Paul Redington, Zurich’s Major Loss Property Claims Manager, said:

“As legislation continues to evolve, enabling under-utilised properties to be repurposed to help ease the housing shortage, the number of office-to-residential conversions has continued to rise. “Increasing the UK’s housing stock is vital and understandably high on the government’s agenda, however it's important that conversions are well-designed and well-built – for example, including cooling features to avoid creating homes that overheat and suffer other issues, such as the escape of water.

“As more intense and frequent heatwaves become a dominant feature of the UK’s summertime, developers need to ensure ventilation and shading are considered to create homes that are safe and resilient to our changing climate.”

Tony Mulhall, Senior Specialist in Planning & Development at RICS, said:

“The continuing pre-occupation in the commercial property sector with what are frequently referred to as ‘stranded assets’ - properties that do not meet future regulatory efficiency standards or market expectations - is increasing pressure to find alternative uses for these properties. Government policies and standards on embodied carbon make building adaptation the main route to re-use, and, in a country experiencing a severe housing shortage and increasing residential property values, conversion to residential is an obvious consideration which the Government has facilitated through various regulatory relaxations.

“It is important to enable the re-use of buildings no longer needed for their original purpose to a use for which there is a fundamental need, but the buildings need to be fundamentally suitable for such conversions. Additionally, the residential standards applied need to ensure we don’t create problems in the future, especially with increasing temperatures predicted. Natural light and ventilation are just two of the key standards that need to be met but there is one often neglected - direct access to external space such as a balcony. Direct outdoor space will become increasingly important as people grow older and less mobile however for developers relying on ‘Permitted Development Rights’ to convert, this would draw them back into the planning permission regime - something they would probably wish to avoid.”

Notes to editors

¹Data gathered from the Ministry of Housing, Communities and Local Government. PS1 District planning authorities – applications for prior approvals for permitted developments (offices/commercial, business and service to residential): 2020 – 1,765; 2021 – 2,121; 2022 – 1,025; 2023 – 1,235