The number of properties converted from retail to residential has dropped 17% year on year to just 376 in 2018/19.
Law firm Boodle Hatfield reported that this was down from 453 in 2017/18, and said this was “particularly worrying” given the rise in vacant retail space over recent years.
The town centre retail vacancy rate hit 10% in April – the highest level since 2015.
Boodle Hatfield said converting retail into residential property has been proposed as a “solution” to long-term empty retail units, but restricted planning rights have led to the drop.
Boodle Hatfield partner Dennis Ko commented: “With the number of retail units empty around the country, it’s surprising that a growing number of councils are opposed to seeing new residential units replacing them.
“While it’s important to ensure the right mix of residential and commercial property, disincentivising developers from creating new homes is unlikely to be the best way to do it.”