Britain has spent another week discovering the limits of the desk fan. June’s severe heatwave provisionally produced a new UK temperature record for the month, with 37.7°C subsequently reported at Lingwood in Norfolk. The Met Office forecast issued on 2 July also indicated that temperatures would turn hot again in places, with above-average conditions and further hot spells possible later in the month.
For UK businesses and landlords, this is no longer only a conversation about surviving an unusually warm afternoon. Repeated periods of extreme heat are changing how commercial premises, workplaces and residential properties need to be designed, operated and financed.
Air conditioning can improve working conditions, protect temperature-sensitive equipment, make customer-facing premises more comfortable and help landlords address properties that regularly overheat to help maintain long-term tenants and even increase rental yield. The obstacle is often the initial installation cost, particularly when a suitable system requires several internal units, external condensers, electrical work, pipework and professional installation.
Air conditioning finance allows businesses and eligible property owners to spread that cost over an agreed term rather than paying for the entire project from working capital. For residential landlords, qualifying installations may also benefit from temporary 0% VAT treatment until 2027, potentially reducing the project cost before finance is even considered.
The Heat Is Already Changing How Britain Spends
Warm weather can generate commercial opportunities as well as operational problems. Office for National Statistics figures showed that retail sales volumes increased by 1.2% in May 2026 after falling by 1% in April. Non-store retail sales rose by 6.1%, with retailers reporting stronger demand for products including fans, paddling pools and outdoor furniture as temperatures increased.
Retailers selling summer products may welcome that temporary uplift, but businesses operating from hot buildings face a different calculation. Restaurants and commercial kitchens must manage heat from cooking equipment, offices need reasonable working conditions, retailers want customers to remain comfortable while browsing, and gyms, salons, clinics, hotels and care facilities must manage indoor temperatures throughout the day.
Portable fans can provide temporary relief, but they do not actively reduce the temperature of a room. Their effectiveness can be limited in glass-fronted shops, commercial kitchens, roof spaces, upper-floor offices and modern buildings that retain heat overnight.
The recent surge in fan sales illustrates the reactive approach many businesses and households still take. Temperatures rise, shelves empty and temporary equipment is purchased at short notice. A permanent cooling system requires more planning, but it can provide a more reliable response over several summers rather than only moving warm air around during the next heatwave.
The UK Air-Conditioning Gap Is Becoming Difficult to Ignore
TIME reported in 2022 that fewer than 5% of UK homes had air conditioning. By comparison, international data commonly places household air-conditioning ownership in Japan at around 91%, while an International Energy Agency and OECD report confirms that ownership exceeds 90% in both Japan and the United States.
Japan is a useful comparison because air conditioning has become a normal household infrastructure rather than a feature reserved for luxury property, moreover, as the Japanese climate is not too dissimilar to the UK, especially in the north, it acts as a useful comparison. What this contrast suggests is that cooling adoption is influenced not only by whether a country is hot throughout the year which would make sense why 99% of UAE properties have air conditioning, but by construction practices, consumer expectations, equipment availability and the willingness to invest in seasonal comfort.
In a nutshell, the UK remains far behind countries where cooling is already an established feature of ordinary housing. This leaves substantial room for growth in domestic installations, landlord upgrades, commercial cooling and reversible heat-pump systems that provide both heating and cooling.
Overheating Is a Health and Housing Issue
Air conditioning should not be presented simply as a lifestyle upgrade. Extreme indoor heat can affect sleep, concentration, productivity and physical health, particularly among older people and those with existing cardiovascular or respiratory conditions.
The UEL research found that the proportion of surveyed households reporting summer overheating had increased from 18% in 2011 to 80% in 2022. More than one-third reported daily overheating, over half experienced disrupted sleep and around one-quarter reported headaches, fatigue or reduced ability to work. Lower-income households, particularly those living in rented accommodation, were more than twice as likely to report regular overheating.
Heatwaves are also associated with measurable increases in mortality. The UK Health Security Agency estimates that 2,985 excess deaths were associated with five heat episodes in England during summer 2022, the highest figure recorded under its heat-mortality monitoring system. Most of those deaths occurred among people aged 65 and over.
It would be too simplistic to claim that every heat-related death would have been prevented by air conditioning. Mortality during extreme heat is affected by age, health, building design, ventilation, urban temperatures, access to healthcare and individual behaviour. However, the evidence demonstrates that overheating buildings are part of a significant public-health problem and that access to effective cooling is unevenly distributed.
High installation costs are likely to be one reason property improvements are delayed. A landlord may recognise that a top-floor flat is overheating but postpone a multi-thousand-pound installation because the full cost must otherwise be paid immediately. A homeowner may rely on fans because permanent equipment appears unaffordable. Finance can help close this adaptation gap by converting a large capital payment into manageable monthly expenditure. Especially for landlords with tens or hundreds of properties.
Why Landlords Need to Take Excess Heat Seriously
Excess heat is recognised within the Housing Health and Safety Rating System, which is used to identify risks to the health and wellbeing of people living in residential property. Updated government guidance describes excessive heat as a housing hazard, while local authorities have powers to act when serious hazards are identified.
This does not create an automatic requirement for every landlord to install air conditioning. Many properties can be improved through external shading, better ventilation, solar-control glazing, shutters, reflective materials or changes to how the building is used.
Landlords should nevertheless assess whether their properties can remain reasonably safe and comfortable during periods of extreme heat. Properties that may require particular attention include:
- Upper-floor flats and roof-space conversions
- Apartments with large areas of south-facing glazing
- Buildings with limited cross-ventilation
- Houses in multiple occupation
- Serviced accommodation and holiday lets
- Homes occupied by older or vulnerable tenants
- Modern, highly insulated properties that retain heat overnight
- Urban properties affected by the heat-island effect
A permanent cooling system may also create a commercial advantage. Tenants increasingly notice whether bedrooms and living spaces become uncomfortably hot, particularly in modern apartments and densely built urban areas. A well-installed, energy-efficient system can help a property stand out without relying on unsupported promises of a guaranteed rent or valuation increase.
Landlords May Qualify for 0% VAT on Certain Installations
One of the most useful cost-saving opportunities is the temporary 0% VAT rate available for qualifying energy-saving materials installed in residential accommodation.
HMRC guidance confirms that fixed air-source heat pumps can qualify for the relief. These systems can operate in reverse, drawing heat from inside a building to provide cooling during summer while also supplying heat during colder periods. HMRC states that it understands most air-conditioning units to be air-source heat pumps, although the treatment of a particular product depends on its specifications and circumstances. Portable or moveable units do not qualify, which makes the short-term case for installing fixed air-conditioning units now stronger.
The relief applies to installations in residential accommodation, including houses and blocks of flats. It is therefore potentially available where a landlord pays for a qualifying system to be installed in a rented residential property; it is not restricted to owner-occupiers.
The important conditions include:
- The installation must be in qualifying residential accommodation.
- The equipment must qualify as an eligible energy-saving material, normally a permanently fixed air-source heat pump.
- A cooling-only product may not qualify if it does not meet the relevant definition.
- Equipment supplied without installation remains standard-rated.
- Where the installer supplies and installs the qualifying equipment as one contract, the supply can generally receive the applicable relief.
- Mixed projects may contain elements with different VAT treatments.
The temporary 0% rate (NI excluded) is scheduled to remain in place until 31 March 2027, after which qualifying installations are due to revert to their normal VAT rate.
It would be best practice if you are a landlord to obtain written confirmation of the proposed VAT treatment from the installer before proceeding. The installer applies the VAT rate at the point of supply; it is not normally a rebate that you claim later. Tax advice should be obtained where the project involves mixed residential and commercial use, separate equipment purchases or wider refurbishment work.
How Air Conditioning Finance Reduces the Upfront Cost
Commercial cooling projects can range from a single split unit in an office to extensive multi-zone systems covering shops, restaurants, warehouses, clinics or apartment buildings.
The full cost may include:
- Wall-mounted, cassette or ducted units
- External condensers
- Variable refrigerant flow systems
- Electrical upgrades
- Pipework and drainage
- Controls and thermostats
- Structural or access work
- Installation and commissioning
- Maintenance agreements
Paying for the whole project from cash reserves can restrict the funds available for wages, stock, marketing, repairs and other investments. Finance allows the installation cost to be matched more closely with the period during which the equipment will be used.
Depending on the applicant and project, possible structures include asset finance, hire purchase, equipment leasing, unsecured business loans and property-improvement facilities.
Asset finance or hire purchase may be suitable where the system and equipment can be clearly identified as business assets. A business loan may offer more flexibility where a large proportion of the project relates to labour, electrical work or building alterations. Portfolio landlords may consider a broader facility where several properties are being upgraded as part of one programme.
The appropriate structure depends on the system, supplier, installation contract, applicant’s credit profile and whether the property is residential or commercial.
Businesses Should Treat Cooling as Operational Infrastructure
The value of air conditioning is not limited to employee comfort. In the right premises, it can support trading performance and reduce operational risk.
Retailers benefit when customers can browse without rushing to leave an overheated shop. Restaurants, cafes and commercial kitchens can provide a more manageable environment for staff and diners. Offices may experience fewer complaints and less disruption during hot periods. Gyms, salons, clinics and care businesses rely directly on maintaining suitable conditions for customers and service users.
Cooling can also protect computers, servers, machinery, medicines, food products and other items that may be affected by prolonged heat. The financial case should therefore consider not only the cost of installation but the potential cost of disrupted trading, damaged stock, reduced productivity and repeated emergency purchases.
Efficient Cooling Must Be Part of a Wider Strategy
Air conditioning is not the only response to overheating, and indiscriminate installation of inefficient equipment would place additional pressure on electricity networks and increase energy use.
A sensible property strategy should first consider shading, ventilation, glazing, insulation, window design, reflective surfaces and landscaping. Air conditioning can then provide controlled cooling where passive measures are insufficient.
Modern reversible heat pumps are particularly relevant because they can provide efficient heating and cooling through one permanently installed system. Their ability to qualify for residential VAT relief may also make them more attractive than portable cooling-only equipment.
The system should be properly sized following an assessment of the building’s floor area, insulation, glazing, orientation, occupancy and internal heat sources. An undersized unit may run continuously without cooling the space effectively, while an oversized system can cycle inefficiently and create unnecessary running costs.
Planning permission, freeholder consent and lease restrictions must also be checked. External condensers can be sensitive in flats, listed buildings and conservation areas, while commercial tenants may require landlord approval before altering the premises.
Practical Steps to Finance Air Conditioning
The first step is to identify which rooms or properties overheat and when the problem occurs. Internal temperature monitoring can help distinguish a building-wide issue from a problem limited to particular rooms or times of day.
The second step is to obtain a professional cooling and heat-load assessment. The installer should recommend a system based on the property rather than simply quoting for the largest unit available.
The third step is to request an itemised quotation showing the equipment, installation, electrical work, VAT treatment and ongoing maintenance costs. Residential landlords should ask the installer to confirm whether the proposed equipment qualifies as a fixed air-source heat pump and whether the 0% rate applies.
The fourth step is to compare the cost of the project with the cost of delay. Businesses should consider productivity, customer experience and operational disruption. Landlords should consider tenant complaints, overheating risk, void periods and the future competitiveness of the property.
The fifth step is to explore finance before signing the installation contract. Knowing the likely deposit, repayment term and monthly cost allows the applicant to select a suitable system without committing an excessive amount of working capital.
Britain Is Heating Up, but the Installation Cost Can Be Spread
The UK remains significantly underprepared for extreme indoor heat. Estimates of domestic air-conditioning ownership vary, but all credible comparisons show that adoption remains well below that of nearly all markets. At the same time, research indicates that overheating is becoming increasingly common, with renters and lower-income households disproportionately affected.
Landlords may be able to reduce the cost of qualifying residential installations through a temporary 0% VAT treatment. Businesses and property owners can then use finance to spread the remaining expenditure rather than waiting for another record-breaking week before buying temporary equipment.
The next heatwave should not need to become another emergency shopping trip for every available fan in Britain. Planned investment in efficient cooling can improve resilience, protect property and provide better conditions for the people who work in, visit or rent the building.
