A 58% surge in commercial-to-residential conversion applications in England has created a growing body of properties outside modern overheating standards. The scale of the shift is raising underwriting and claims concerns across the UK property insurance market.
Government planning data analysed by Zurich UK shows applications to convert offices into homes rose from 1,025 in 2022 to 1,623 in 2025. In the past decade, more than 103,000 former commercial buildings were developed under planning rules introduced in 2021.
The insurance problem is structural. Commercial buildings were designed to different tolerances than residential properties. Many converted homes feature sealed windows, limited ventilation, large glass façades and building fabric that pre-dates modern residential standards. Most fall outside current overheating regulations, which apply only to new-builds.
The consequence for claims is already visible in the data. UK property claims hit a record £6.1 billion in 2025, with domestic subsidence payouts reaching an all-time high of £307 million. Deloitte has forecast that home insurers will swing to a net loss in 2026, with a combined ratio of 102.1%. The Prudential Regulation Authority (PRA) launched its General Insurance Stress Test in May 2026 to press firms on climate-driven property exposure.
Megan Dunford, Zurich's head of large and complex property claims, said sustained temperature variation places material stress on building fabric.
"This increases the risk of thermal expansion and contraction, which may contribute to cracking, subsidence, and ultimately escape of water incidents," Dunford said. "Over time, this not only undermines building safety and durability, but also exposes residents to higher maintenance costs and reduced living standards."
Some carriers are already adjusting how they price and accept the risk. Alfie Richardson, underwriting manager at Iprism, said prolonged extreme heat has become "a more material property risk for the UK insurance market, particularly from a subsidence perspective."
Some insurers have already applied increased subsidence excesses, tighter acceptance criteria, and natural peril exclusions. Steven Coxon, head of subsidence at Claims Consortium Group, said 2026 was tracking conditions similar to the 2025 surge year.
Subsidence claims reached £153 million in the first half of 2025, around one sixth of all property claims costs in that period. Glyn Brookes-Humphrey of Woodgate & Clark said 2025 was "a particularly bad year for subsidence" as a consequence of dry spells.
The British Geological Survey projected subsidence frequency and geographic spread may grow over coming decades, potentially expanding beyond London and the Southeast.
LSE's Grantham Research Institute on Climate Change and the Environment found half of all UK homes are at risk of overheating. That figure is projected to reach 90% under a 2°C warming scenario. Existing buildings are excluded from current overheating regulations.
The UK has one of the oldest building stocks in Europe. The government has set a target of 1.5 million new homes in the current parliamentary term, with commercial-to-residential conversion a key component.
