Environmental initiatives for property in 2023

Matthew Jones
Matthew Jones

Published: January 30th, 2023

7 min read

Sustainability and decarbonisation targets to remain at the top of the agenda for UK construction throughout 2023, and here we look at some areas of legislation and initiatives that are set to influence the real estate sector in the next 12 months.

Biodiversity Net Gain for Developments

In an article shared in an earlier edition of our construction e-news, we discussed how the Environment Act 2021 was set to impact planning decisions in residential and commercial development. Towards the end of 2023, secondary legislation will come on track requiring all planning applications for development (bar a few exceptions) to include specifics on the delivery of at least a 10% biodiversity net gain. This means that the land being developed needs to be left in a better state than it was in at pre-development. While some authorities have embraced this initiative already, it will become law for all later this year. The schemes dealing with the on and offsite environmental measures will need to be considered carefully, as they need to be managed and maintained for a minimum of 30 years. These requirements will be part of section 106 planning obligations and conservation covenants and enforced this way.

While this can be seen as challenging, developers could see these as the potential opportunities they are, by delivering on their green credentials as part of a sustainable business model.

Minimum Energy Standards (EPC's)

The improvements in the energy efficiencies of the UK's commercial building stock are being underpinned by the uplift in their minimum energy efficiency standards.

In previous years, landlords had to ensure a commercial building had an energy assessment of E or above for new tenancies, but From 1 April 2023, it will be unlawful for a landlord to continue to let a commercial property with an EPC rating of F or G - unless an exemption applies and has been validly registered. Landlords must therefore carry out energy improvement works to bring the EPC rating up to at least an E or register an exemption. This will no doubt become a topic that will be raised by tenants' solicitors during lease renewals.

Landlords do not have an automatic right of entry to carry out energy improvement works, and whether a landlord has a right of entry will depend on the drafting of the lease. Where there is no right, landlords will need the tenant's consent. If not given, landlords may be able to register a "consent exemption".

From 1 April 2023, a buyer of tenanted commercial property with a rating below E will be able to register a temporary six-month exemption to enable the buyer to get the property up to the required standard or register a longer-term exemption.

It is important that landlords are ahead of these changes, and discussions with tenants are had at the earliest stage possible.

At present, consultations are ongoing in relation to raising the minimum standards above E rating, and once again considering carbon target and sustainability, generally it is highly probable that this will happen at some point.

2023 is set to be another busy year in property, and it seems that changes in this area will be driven ever more by environmental factors, and property owners and developers are going to have to plan ahead.

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