The Shift Towards Sustainable Property Continues
Sustainability continues to be a big trend in the UK property market, and new-build developments are leading the way.
According to research published by Knight Frank, the proportion of new builds meeting the net zero threshold has seen a considerable rise in the past decade.
Read on for more information on how this affects buy-to-let costs in 2023.
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UK Property Investment & Energy Efficiency
In Knight Frank’s study, energy usage had to meet the RIBA 2030 Goals recommendation of 35 kWh per square metre per year to be considered a net zero home.
The number of homes that meet this net zero threshold has seen a sizable increase since 2009, when they made up just 0.1% of new-builds.
In 2022, this had risen to 4% for houses and 5.7% for flats.
Another positive finding that points towards a shift to energy efficiency in the UK property market is that the average energy consumption of a newly built home has decreased. It was 120 kWh per square metre a year in 2009, down to 80 in 2022.
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The Demand for Energy-Efficient Properties Keeps Growing
Despite the recent U-turn on proposed changes to EPC legislation, the government has stated they are still committed to achieving net zero by 2050.
Due to this, it’s likely that there will still be changes to current legislation and new environmental laws targeting the private rental sector sometime in the future.
In order to future-proof their investments, many investors are on the lookout for eco-friendly properties and the biggest regeneration projects in the UK.
Apart from staying ahead of any upcoming legislative changes, there are other benefits to keeping an investment green. This includes increased rental demand and higher-paying tenants.
According to a property study from Shawbrook Bank, more than half of renters would avoid properties that fail to meet satisfactory energy-efficiency levels. Their survey results showed that 58% of tenants would be less likely to consider properties with an EPC rating of D or below. This is due to anxiety about increasing energy bills and wanting to reduce their personal carbon footprint.
Now more than ever, people are concerned about rising energy bills, with many renters willing to pay extra for an energy-efficient residence that may help shield them from unexpected rising costs. A survey from Knight Frank found that 72% rate a home’s energy efficiency as more important than before the Ukraine conflict.
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What to Look Out for in an Energy-Efficient Property Investment
The UK housing stock is slowly becoming more energy efficient, but a pronounced gap exists between new-build properties and the resale market.
Foxtons reports that nearly 9 out of 10 new-build apartments in London were assigned the highest energy performance certificates of A or B, while only 27% of the resale market was in the upper EPC bands.
For this reason, more investors are turning to new builds for future-proof property investments.
Reflecting these overall trends, there’s been a rise in new-builds designed with energy efficiency in mind.
This includes the rise of ‘eco-properties’, such as ELEMENT – The Quarter, located in Liverpool.
Eco-properties include state-of-the-art technology such as rainwater harvesting, LED lighting, and air-source heat pumps. There’s also a focus on low-carbon smart technologies like central business management servers.
These features can help save money in the long run for property investors by avoiding pricey energy-efficient upgrades and lower costs relating to the upkeep of the property.
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