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The property market and climate change: an overview of key changes

Gateley Legal

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During 2019 we saw a renewed focus and shift in social attitude as the impact of climate change, and the ways in which we can help, became a high priority for many.

With that in mind, we also saw, and will no doubt continue to see, this shift impact the property market, with the Government remaining focused on considering the wider role that infrastructure and property development has to play with regards to climate change. 

In this article we  look at some of the key changes and decisions during 2019 and their likely implications for property owners and developers as we look ahead into 2020. 

Changes to the Minimum Energy Efficiency Regulations

One key change which property owners and developers need to bear in mind as we enter 2020 is the Government’s recent consultation on whether to make it unlawful to continue to let a non-domestic property with an Energy Performance Certificate (EPC) rating below C or B by 2030; resulting in a cost of approximately £1.5bn to £5bn respectively between now and 2030.

This proposal follows the implementation of the Minimum Energy Efficiency Regulations (MEES) in April 2018, where it was made unlawful to grant a tenancy of non-domestic premises with an EPC rating below E, unless an exemption applies, with this minimum rating applying to all continuing tenancies from 2023. 

It is worth noting that the change in the minimum EPC rating would provide landlords with a long period to implement property alterations and, where the action required to bring the building up to the minimum EPC rating is not cost effective, the landlord would only be required to upgrade the building to the highest EPC band that is cost effective. 

However, it currently remains unclear whether the required EPC rating will rise to B or C and whether it will be introduced with a single implementation date or incremental milestones. What is clear is that there will be a significant number of landlords who will need to carry out works to improve the energy efficiency of their building to meet the new requirements, and consideration should be given as to the ramifications and cost implications of doing so. 

Electric vehicle ready

Towards the end of 2019, the Government launched two consultations which reflected their focus on increasing the use of electric vehicles. The consultations proposed requirements for all ‘new’ buildings to be electric vehicle ready and with a plan to create electric vehicle smart charging points to deal with the increase in electric car use. 

The consultations propose that every new non-residential building and every non-residential building that is undergoing a major renovation and has more than 10 car parking spaces, is to have one charge point for an electric vehicle for one in every five spaces. There is also a proposal for at least one charge point in existing non-residential buildings with more than 20 car parking spaces. 

This is a positive step in making electric vehicles more accessible however it puts pressure on property owners and developers to be able to factor in the cost of this work and any upkeep to ensure their property is as future-proof as possible. 

Taking into account existing schemes

We also saw consideration being given to existing renewable energy systems when the High Court in R(McLennan) v Medway Council and another [2019]  confirmed that one of the planning considerations for a local planning authority when deciding whether to grant planning permission includes any effect the development may have on an existing renewable energy system. The case involved solar panels and interference with the light reaching them. 

While this is only a High Court decision, it is a significant judgment for developers as the case sets out the approach of the court when dealing with this type of issue as well as demonstrating that developers will need to consider any impact the development may have on existing renewable energy systems.  

The implications for property owners and developers

It is clear that as we become more conscious about our environmental impact, the Government is keen to maintain its agenda to reflect this. Only time will tell how property owners and developers will react to more changes, but consideration needs to be given to the likely cost implication in keeping up with any changes, as well as ensuring that any property is future-proof and considerate of any existing renewable energy systems.

Property developers and owners alike will also need to anticipate a change in market demands, as companies and individuals become more aware of their environmental responsibility and the impact that any property may have on the environment. 
 

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