New studies show energy saving is central to future of commercial and private rented property

New studies point to the central role of energy saving in underpinning a sustainable commercial and domestic rented sector.

The three studies are clear about how important it is for commercial and domestic landlords to make the most of the opportunities offered by more efficient utility management in properties.

The “Green to Gold” survey from property agent GVA advises that fund managers and investors in the UK believe the investment market “‘no longer views sustainability as a nice to have”.

The fifth biannual report highlighted a big rise in the number of properties being assessed against sustainability criteria with over half the respondents reporting that 73% of their investment portfolios had been measured this way compared to a quarter two years ago.

More than half of those questioned said that the market now viewed sustainability a key driver of investment performance, not simply an add-on while 94% per cent had sustainability policies at organisational or fund level.

The main driver for the sea change in approaches to sustainability assessment seems to be national policy as just over half (56%) of those questioned said that Government activity was a reason for the move to understand sustainability credentials of assets.

The survey also shows that Minimum Energy Performance Standards (MEPS) regulations are anticipated to have the greatest impact in the industry and on investment decisions and that 71% of those surveyed will be affected by the Energy Savings Opportunity Scheme (ESOS).

It’s certain that real estate in the UK is moving in response to the market pressures and regulatory drivers. We believe that it is the right time for the commercial sector to resolve challenges of effective, efficient buildings working with an experienced energy efficiency partner to reduce energy and water consumption in a sustainable way.

Private landlords

A further report just published advises that the domestic rented sector also needs to act on energy use. Future of London says in “Engaging Private Landlords in Energy Efficiency” that the capital’s councils need to develop a co-operative relationship with private landlords to ensure they make necessary energy efficiency improvements to their homes.

The report says that current programmes, regulations and incentives are not enough “to enable the deep retrofit required for London’s aging rental properties”. Ten per cent more privately rented properties in London fall under the Decent Homes Standard than both owner-occupied and social-rented tenures.

Future of London advises that councils should target funding opportunities for landlords with the whip of enforcement regulation to improve energy efficiency, “aim to facilitate the long-term improvement of this growing sector (the private rented sector, or PRS) by fostering cooperation between boroughs and their landlords”.

The changing landscape of rented sector regulation is helping to concentrate minds. The Energy Act 2011 stipulates that in April 2016 a landlord cannot unreasonably refuse energy efficiency improvements requested by the tenant and two years after that, all properties will need an Energy Performance Certificate of at least an E to be available for let.

There really is very little time left to plan and act on energy efficiency.

Energy focus

A third study, this time focusing on the US rented sector, has relevant data to guide and inform developments in energy efficiency for the UK commercial property market.

Washington State University research found that over a third of new commercial buildings included energy-saving features but many occupants did not have the advice or training to maximise the energy savings.

The study of 50 high-performance buildings found that an energy-efficient property demanded the development of a culture focused on conservation. In buildings with an energy-focused culture, workers were engaged, participated and were satisfied with their building environment.

The research indicates that office culture has often ignored and even discouraged common-sense energy saving and one solution is to develop ‘occupant training programmes’ to take maximise the benefits of high-performance buildings.

We’d agree that engaging employees actively in sustainable energy and water efficiency is essential as part of Corporate Social Responsibility strategies. Our experience is that this engagement can transform a work environment as well as make it a more attractive proposition for potential staff.

These three reports indicate to us that there is no benefit in ignoring energy efficiency in the rented sectors. It simply makes no sense now to avoid taking crucial decisions and actions that will have a very positive and sustainable impact on commercial and cultural values.