Empty Bath shops could be converted into flats as the council looks to plug a £5million black hole caused by the pandemic.

Four in five of Bath and North East Somerset Council’s 234 commercial properties are in retail, a sector that has been “devastated” over the last 15 months.

It is drawing up plans to lend cash to Aequus, its development company, and then lease it the empty units so the firm can convert them into flats, rent them out and boost the authority’s coffers.

The commercial estate normally brings in £19million to fund key services but £5million has been wiped off that figure by rising voids, reductions in current market rent and outstanding debt that is now at risk.

A report going before cabinet members on July 20th says: “Coronavirus has accelerated the pace of the change in markets, communities and society.

“This has been acutely felt in the retail property market meaning that legacy issues of obsolescence and complicated management have been compounded by failing tenants, falling rents, and a need for a greater breadth of skills and new investment. We need to recognise the challenges to vitality in Bath and reduce reliance on tourism.

“We need to create a sustainable economy with greater opportunity for betterment, greener, healthier outcomes, affordable homes and a stronger, more resilient city which celebrates its unique heritage yet is fit for the future.”

The council is set to bring in new governance arrangements, giving the commercial estates team autonomy to enter into new lease arrangements.

A separate project is looking to breathe new life into the high streets of Bath, Keynsham and Midsomer Norton by filling empty shops with art exhibitions or new commercial uses, and to use a £1.2million West of England Combined Authority grant to jazz up Milsom Street – once Bath’s premier shopping destination – and Kingsmead Square.

The authority’s long-term aspiration for Milsom Street is to support its transition towards a “mixed use urban quarter with an emphasis on leisure and culture, together with active ground floors and a greater mix of residential and non-retail uses on upper floors”.

It wants to prioritise walking, cycling and public transport and support pavement licences to create a “cafe culture”.

Cabinet members will decide on next steps for both projects and whether to accept the Weca funding next week.