by Jonathan Witter
Development Monitoring Director at Assetz Capital
Energy efficiency is on the way
You may have noticed a change, the regulations are getting tighter, the planet is getting warmer, and the climate is becoming more extreme and unpredictable. These regulations may feel like they’re coming thick and fast but the anticipated demand for energy-efficient homes will increase from conscientious homeowners.
These proposed EPC UK regulations have the potential to significantly impact the residential housing market. These regulations aim to raise energy efficiency standards in buildings and reduce carbon emissions. Within this changing landscape, commercial finance brokers have a crucial role to play in supporting housing developers. In this article, we will explore the implications of the proposed regulations on the residential housing market and how commercial finance brokers can assist housing developers in navigating these changes, including opportunities for renovating old buildings and properties, as well as developing new energy-efficient housing.
Understanding EPC UK Regulations
The EPC UK regulations focus on enhancing energy efficiency in buildings and promoting sustainability. These proposed changes primarily involve raising minimum energy efficiency standards and implementing stricter compliance requirements.
Timeline of Key Dates for Commercial Property
To provide a clear framework for the implementation of the EPC UK regulations, specific dates have been identified for compliance milestones in the commercial property sector:
April 1, 2018: It became unlawful to grant new leases of commercial property with an EPC rating below E, marking the minimum energy efficiency standard for new leases.
April 1, 2023: It became unlawful to “continue to let” commercial property with an EPC rating below E, indicating that existing leases would need to comply with the minimum energy efficiency standard. The Government currently have a target for all newly built residential and commercial properties to have an EPC rating of C or above.
April 1, 2025 (probable): The requirement to register a valid EPC for let commercial property is expected to be introduced, ensuring that all commercial properties in the rental market have an up-to-date energy performance assessment.
April 1, 2027 (probable): The minimum energy efficiency standard is projected to be raised to an EPC rating of C, further emphasising the importance of improving energy efficiency in commercial properties.
April 1, 2028 (probable): The current Government target is for existing rented residential and commercial properties to have an EPC of C or above by 2028. Another requirement to register a valid EPC for let commercial property is expected to be implemented, ensuring ongoing compliance with the energy efficiency standards.
April 1, 2030 (probable): The minimum energy efficiency standard is projected to be raised to an EPC rating of B, representing a significant advancement in energy efficiency requirements for commercial properties.
Impact on the Residential Housing Market
Demand for Energy-Efficient Homes: As the proposed regulations push for higher energy efficiency standards, the demand for energy-efficient residential properties is expected to rise. A survey conducted by the UK Green Building Council found that 80% of homebuyers are more likely to buy or rent a property with a higher energy efficiency rating. This consumer preference for energy-efficient homes will increase the desirability and value of such properties.
Renovation Opportunities for Older Buildings and Properties: The proposed EPC UK regulations present an opportunity for housing developers to renovate and upgrade older buildings and properties to meet higher-grade EPC standards. By retrofitting existing structures with energy-efficient technologies, improving insulation, and implementing renewable energy systems, developers can transform older buildings into desirable and sustainable housing options. This presents a significant opportunity for developers to revitalise older properties and contribute to the overall improvement of the housing stock.
Energy-Efficient New Housing Developments: The proposed EPC UK regulations also encourage the development of new housing projects that prioritise energy efficiency from the outset. Housing developers can take advantage of this opportunity by incorporating energy-efficient design principles, such as effective insulation, high-performance windows, efficient heating and cooling systems, and the use of renewable energy sources. These new housing developments will not only meet the regulatory requirements but also appeal to environmentally conscious buyers who seek energy-efficient and sustainable living spaces.
Financing Support for New Energy-Efficient Housing: Commercial finance brokers can play a vital role in assisting housing developers in securing financing for new energy-efficient housing projects. Brokers with expertise in sustainable financing can help developers access funding sources that specifically support energy-efficient construction. This could include green financing programs, incentives for sustainable developments, or lenders who prioritise environmentally friendly projects.
Looking beyond the new EPC regulations of 2023
If Developers are committed to sustainable building practices, there is an opportunity to go beyond the mandatory requirements. Sustainable retrofitting, while not compulsory, is increasingly gaining popularity in the letting arena. But what exactly does it entail?
In simple terms, sustainable retrofitting refers to the process of refurbishing an existing building in a way that enhances its efficiency, reduces its environmental impact, and ensures sustainability for the future. The specific actions taken during retrofitting can vary, but here are some of the most popular measures:
Real-time monitoring of energy consumption: By implementing sub-metering and providing anytime, anywhere access to energy data, you gain visibility into energy usage, enabling better control and optimisation.
Water efficiency improvements: Retrofitting can include digitising water usage and energy data of cooling towers or chillers, leading to insights that help identify opportunities for water conservation.
Continuous commissioning of HVAC systems: Through ongoing monitoring and optimisation, you can ensure that your heating, ventilation, and air conditioning systems operate at peak performance levels, maximising energy efficiency.
Green Roofs: Installing vegetated roofs can help reduce stormwater runoff, and decrease a building’s cooling and heating energy demands, all while being lightweight, cost-effective, and requiring minimal maintenance.
Indoor Air Quality enhancements: Implementing “green” practices that eliminate pollutants such as dust, mould, or chemical cleaning agents from indoor air can greatly improve the well-being of occupants.
Demand response and load curtailment participation: Green buildings can take part in demand response programs, reducing electricity usage during peak demand periods. This participation can lead to significant financial incentives.
LED retrofits: By upgrading lighting systems to energy-efficient LEDs, you can achieve immediate energy savings. Occupancy data can also be utilised to assess room utilisation and potentially reconfigure spaces for improved efficiency.
Optimal space utilisation: Retrofitting offers an opportunity to reassess available space and avoid heating wasted space.
Retrofitting IoT (Internet of things) sensors and intelligent controls: Upgrading to modernise building automation systems can be costly. However, retrofitting with IoT sensors can capture additional data relevant to HVAC controls and enable the development of automated intelligent controls that surpass traditional programming, enhancing energy efficiency.
The long-term benefits of an efficient building and potential savings outweigh the initial investment and increase value. By going beyond the minimum requirements set by EPC regulations, you contribute to a more sustainable future and create a healthier and more cost-effective environment for building occupants in the future.
The proposed EPC UK regulations have far-reaching implications for the residential housing market, necessitating higher energy efficiency standards and stricter compliance measures. Commercial finance brokers have a vital role to play in supporting housing developers as they navigate these changes. By assisting developers in securing financing for energy-efficient projects, streamlining compliance processes, facilitating the renovation of older buildings and properties, and supporting the development of new energy-efficient housing, commercial finance brokers can contribute to the success of sustainable housing development.
Together, these efforts can lead to a more environmentally conscious and economically viable residential housing market in the United Kingdom, while revitalising older properties, expanding the availability of energy-efficient housing options, and promoting the development of new sustainable communities.