Weekly Property Insights Newsletter

Commercial Conversions Under Scrutiny: Uninhabitable Homes Risk

With the growing trend of converting commercial spaces into residential homes, Zurich UK, a leading insurer, has raised a red flag over potential long-term risk. This trend has surged in recent years, driven by companies downsizing office spaces. Data from Zurich UK shows a 20% year-on-year rise in applications for these conversions, with more than 89,500 homes repurposed from commercial buildings since 2015 under relaxed planning rules. While the approach is seen as an efficient way to increase housing stock, Zurich highlights substantial risks if these conversions lack proper design standards, especially regarding overheating and plumbing.

Experts from the London School of Economics warn that over half of UK homes are at risk of overheating, a concern heightened by consecutive record-breaking summers. As climate change intensifies, housing units without sufficient cooling, ventilation, and shading could become increasingly uninhabitable.

Key Points from Industry Leaders:

• Paul Redington, Major Loss Property Claims Manager at Zurich UK: Emphasizes the importance of high design standards to prevent overheating and plumbing issues. Redington notes that as heatwaves become more common, residential units need robust cooling features to remain safe.
• Tony Mulhall, Senior Specialist in Planning & Development at RICS: Highlights the need for direct outdoor access, like balconies, which is often sacrificed in conversions. Mulhall stresses that using outdated commercial buildings for residential purposes should not overlook the importance of suitable living standards.

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EPC Ratings: A Third of Sale Stock Falls Below C Rating

With the UK's goal of a greener housing sector, energy efficiency is under scrutiny. New analysis by epIMS reveals that 33.8% of properties listed for sale in Britain have EPC ratings below C, with Wales at the highest rate of non-compliance at 50.1%, followed by Scotland at 45.7%. In England, while more compliant, 33.2% of properties still fall short of the target. In major cities, Bradford leads with 46.2% of homes rated below C, followed closely by Edinburgh at 39.6% and Brighton at 39.4%.

Craig Cooper, COO of epIMS, explains that landlords often face substantial upgrade costs, averaging ￡8,000 per property, to meet the new EPC standards. Cooper suggests that affordable improvements, like installing PV panels, could help landlords achieve compliance while limiting rent increases for tenants.

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HM Land Registry Fee Hikes: Simplifying Document Access

Starting on the 9th of December, HM Land Registry will introduce new fees on conveyancing documents, such as bankruptcy searches and registered title documents. This increase aims to support a digital transformation, reducing processing times for transactions. The revisions, described by HM Land Registry as overdue, will simplify fee structures, though they may slightly raise transaction costs for buyers and sellers.

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Interest Rate Cuts Expected: What It Means for Buyers and Investors

The Bank of England is likely to cut interest rates in November, with markets predicting a quarter-point reduction. This potential move follows a decline in inflation to 1.7%, giving homebuyers and investors a promising forecast for more accessible mortgage rates. However, experts anticipate a cautious approach in December, with the BoE expected to maintain rates unless further positive inflation data supports additional cuts.

Stay tuned next week as we continue to provide insights and updates on the dynamic property market landscape.

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