More than half of uk directors will cut back office space as staff move more permanently to working from home in a sign of the long-term impact of the pandemic on the british property market, according to a business group survey.

Companies have been forced to send many employees home to work over the past six months following lockdown restrictions, most recently in september after the government reversed its back-to-the-office plans.

This has led to many people embracing homeworking as a default option, with managers reporting little sign of a feared loss of productivity.

Company chiefs are now rethinking the need for expensive city centre offices. in a survey conducted by the institute of directors in september, more than half said their organisations intended to cut long-term use of workplaces. more than one in five in the survey of almost 1,000 company directors reported their use would be significantly lower.

In the iod survey, nearly three-quarters said they would encourage more staff to home work after the pandemic.

Alarmingly for property owners, among those who were using their workplace less, more than four in 10 said that one of the main reasons was that working from home was proving more effective than their previous set-up.

Property executives are concerned about lasting shifts on portfolios. rents are usually slow to respond given normally long-term leases, but managers have told the financial times that they would reconsider downsizing at the next lease break or when their terms end.

Many buildings in the city of london in particular were only just beginning to see more workers return in september, when the government changed its guidance again to only let workers return who needed to do so.

Remote working has been one of the most tangible impacts of coronavirus on the economy. for many, it could be here to stay, said roger barker, the iods director of policy.

He added that working from home doesnt work for everyone, however, and said the office still had benefits such as development and networking.

Looking ahead, it seems more and more companies will take a blended approach to where they work. any transition can cause challenges, and the government should look to ease this.

A third of survey respondents said they were keeping people working from home because of the possibility of a further surge in coronavirus infections and more restrictions, while a similar number cited concerns over public transport.

But the iod warned that the prospect of increased homeworking over the long term could raise legal questions around employers responsibilities for staff outside the office.

The institute urged the government to take steps to help smes and the economy adapt to increased homeworking, such as tax incentives for small companies to use new digital technologies.

Other strategies to survive the pandemic will also lead to longer term changes in how companies operate: more than a fifth of the respondents had moved a service they provided online, according to the iod, and were planning to keep this in place.