Impact of Government’s new Clean Growth Strategy on property industry

United KingdomScotland

The Department for Business, Energy and Industrial Strategy (BEIS) recently published the Government's Clean Growth Strategy.

The Clean Growth Strategy is a crucial plank of Government policy, affecting all aspects of the UK economy. It will have a significant impact on non-domestic and domestic property in the years to come.

The Strategy sets out policies and proposals that aim to accelerate the pace of “clean growth”. This is the delivery of increased economic growth with decreased emissions. This will require significant investment from the private sector and the Strategy sets out the first steps to support the growth of the green finance sector in the UK.

On a real estate specific note, what is particularly interesting is that the Strategy includes proposals to consult in 2018 on improving the energy efficiency of new and existing commercial buildings through tighter minimum energy standards, and also on raising minimum standards of energy efficiency for rented commercial buildings.

So, as previously suspected, properties may well end up requiring at least a “D” (EPC - Energy Performance Certificate) rating in the near future, something that all those involved in the property industry should closely bear in mind.

In relation to domestic property, the Strategy includes:

  • The aim for as many private rented homes as possible to be upgraded to at least a “C” rating by 2030 where practical, cost effective and affordable.
  • Consulting on making the requirements for landlords to meet minimum energy efficiency standards more effective.

The Government also intends to issue a call for evidence on EPCs in Spring 2018, in which it will seek views on their improvement and extending the triggers for obtaining an EPC.

There is great focus on 1 April 2018 from when the grant of a new lease of property with an “F” or “G” EPC rating will be unlawful. However, it is clear that this is only one stage in the journey and that the shift to clean growth will be at the forefront of policy and economic decisions made by governments and businesses in the coming decades. This is likely to have a significant impact on the property industry and, therefore, the Strategy despite its length of over 150 pages merits close attention.