The UK property industry will strive to meet Government sustainability targets in spite of the continued economic downturn, property industry leaders told a MIPIM event earlier this week.
By 2018, all F and G rated residential and commercial property could be deemed unlettable under the Government's 2011 Energy Act.
Experts think this could affect around 18% of commercial property in the UK, and this is around 600,000 properties. Delegates at the ‘Are we too broke for sustainability’ seminar, held on Tuesday, heard that although it's unlikely a green premium will lead to higher rents on more sustainable buildings anytime in the near future, the legislation could lead to F and G rated properties losing value. The British Property Federation is calling upon the government to make it clear when E rated or better performing properties will face the same prospect, as this would provide landlords with a clearer road map.
"The property industry is doing a great deal despite the economic downturn to put its house in order. But it needs clarity from the government as to exactly when F and G rated properties will be unlettable and a clear road map going forward. The economic woes have made things difficult but sustainability as an issue isn't going away, and faces becoming more and more business critical," said Liz Pearce, Chief Executive of the British Property Federation.
This view was backed up by Philip Parnell, head of Real Estate Management & Value at Drivers Jonas Deloitte. He pointed out that instead of concentrating on the value added to more sustainable properties, the focus should be on how this legislation will erode the value of less sustainable stock.
Parnell said "This is where the valuation community can most clearly articulate differentials in values through variances in, for example, avoid, CapEx and relet assumptions and where we are arguably therefore already witnessing value shift now. This trend looks set to continue as regulatory mechanisms and legislation targets weaken certain existing stock; and consequently where many property investors are most exposed."
UK property is given an energy rating from A to G, which is based on energy usage per square meter,energy efficiency based on fuel costs and the environmental impact based on CO2 emissions.
MIPIM is an international real estate show for professionals, held over four days in Cannes, France, and it is due to end today.