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The effects of UK environmental policy on the real estate industry

In the UK, the government has a clear environmental agenda – and this agenda is likely to be closely mirrored by an incoming labour government. This environmental agenda is put into action through a host of environmental regulations, which are felt in every corner of the economy. However, in the real estate sector, these concerns are particularly evident.

In the UK, the government has a clear environmental agenda – and this agenda is likely to be closely mirrored by an incoming labour government. This environmental agenda is put into action through a host of environmental regulations, which are felt in every corner of the economy. However, in the real estate sector, these concerns are particularly evident.

UK Environmental Focus

The UK has committed to targets agreed at the COP28 climate summit, held in Dubai. This means that it must reach ‘net zero’ emissions by 2050. To achieve this, the government has put forward a range of incentives and disincentives. You might consider the now-shelved decision to ban the sale of new petrol and diesel vehicles.

Expansions in alternative energy, carbon capture, and heat pump installation are all part of a broader push toward net zero. The construction industry has a particularly large role to play.

The state of the buildings we live and work in, and the methods through which these buildings are constructed, can have a considerable environmental impact.

Energy efficiency of buildings

In March 2015, the government began to insist that both new and existing buildings meet a range of energy-efficiency characteristics. These requirements are enforced through the planning consent and building regulation regiemes. For example, if a window, door or wall doesn’t insulate to the required degree, it won’t be compliant with regulations.

Those investing in property can be sure of what they’re buying because of energy performance certificates, which provide advice on the energy efficiency of a building. This has implications in the rental market: from 2023 landlords have been forbidden from letting a property that doesn’t make the minimum ‘E’ rating, laid out in the EPC.

Navigating your tax responsibilities can be difficult – especially when the system is being made more complex. This is why many businesses opt to seek the input of a third-party tax expert.

Regulation of land

Regulation doesn’t just affect the buildings themselves, but the land on which those buildings stand. For the most part, in the UK, local authorities have the final say in whether a structure can be built on a particular piece of land. If the building in question is being used for a particular purpose, then further regulation might be encountered. For example, restaurants and pubs will need to be licensed.

Environmental clean-up and contaminants

In some cases, a company might be held accountable for any environmental damage. According to the Environmental Protection Act 1990, it is the duty of the person (or organisation) who caused the damage to restore the land to its previous condition. However, in some cases, it’s the landowner who is made to deal with the problem (often if the person who caused the damage cannot be determined). Thus, if someone fly-tips on your property, you might end up having to deal with it.

Other regulation around the construction of buildings

The building regulation regime is focussed on pushing the construction industry toward sustainable, modern materials, and away from inferior, antiquated ones. Larger organisations must already contend with greenhouse-gas reporting obligations, with frequent audits being mandated.

There’s also the Climate Change Levy, which puts a carbon tax on non-domestic energy. This encourages business to abandon these energy sources in favour of other, cleaner ones.

23 May 2024

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