Vital that you look at Part J Building Regs. Yes when converting an open fire to a stove, the chimney needs to be lined. Lots of things to consider but well worth DIY if you have the time. Use a stainless steel double walled liner. With HiPS, your conversion will need to meet Bldg Regs, else you're going to find it difficult when it comes to selling. It's also basic safety for you and your family.
We have just had a stove fitted. The fitter said to me that if you can line your chimney you should. They used a fleixble steel lining which was fed down the chimney from the roof, this then then attached to our Wood Burning Stove.
I'm not sure whether a liner would fit down that gap, otherwise it would be quite tight.
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