Keen to go green?

In December 2020, the Government announced their ambition to cut greenhouse gas emissions by at least 68% in 2030, compared with 1990 levels – the world’s highest target. Buildings account for 19% of UK emissions and will undoubtedly permeate through the Government’s climate policy. The Government’s key proposals are set out below.

Commercial Property

• The Government is proposing to increase the minimum EPC rating of rented non-domestic buildings from E to B by 2030. The cost implications of bringing a property up to compliance makes it prudent to pre-empt this future change now, when undertaking renovation or construction work. For existing properties that are below band B, it remains to be seen what exceptions will be available, such as where it would be cost-ineffective to undertake the renovations required to comply.
• To encourage electric vehicle uptake, the government are proposing to introduce regulations requiring charging stations to be built into all new buildings. £1.5 billion will be made available to install charging points in workplaces, streets, homes, and the motorway. In any event, whether mandated by the government or not, it would be wise to consider accommodating for electric vehicles now, given the ban on new petrol and diesel cars and vans from 2030.
• A consultation for a performance-based energy rating scheme will be considered, given EPCs have long been considered a blunt instrument, unrepresentative of actual energy performance.
• For energy intensive industries, the government proposes to launch a UK Emissions Trading Scheme to replicate the EU’s scheme. Expansion of the scheme to other industries are also being considered.

Residential Property

• Currently, 66% of homes in England have an EPC rating of D or below. The government has ambitiously undertaken to increase ratings to C or above by 2035. To support this, investment will be made available in energy saving facilities such as insulation, double and triple glazing, smart meters, as well as other more recent technologies such as air source heat pumps.
• The government proposes for lenders of residential properties to annually disclose the EPC data of their portfolios, and by 2030, to have a portfolio average of EPC band C. This could cause problems for buyers seeking mortgages for homes with poor ratings, or prevent re-financing options for lower performing homes. A further consultation is set to happen this year which will hopefully address these issues.

The government is certainly keen to go green. To achieve the ambitious targets of reducing the UK’s carbon footprint, all of us in the property sector will have to play our part. Whether this hinders economic recovery post COVID-19, or kickstarts a green economy, remains to be seen. The results of the consultations in 2021 will hopefully provide some clarity on the legal and economic consequences on climate policy for the property sector.

For advice regarding the effects of these proposals on your property portfolio or any other property matters, please contact Jo Bewley, Head of Property Services (jo.bewley@bpe.co.uk 01242 248445) or another member of the BPE Property team.

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.