November 25, 2021

How could rising temperatures impact the UK property market?

Environmental concern has been the focal point for much of November, with the COP26conference continually grabbing headlines. As an opportunity to get the world’s largest players together, there was much discussion surrounding how we can collectively tackle growing global temperatures.

One of the largest contributors to emissions is the property sector, through land absorption, construction and utilities. There is a clear concern that this is an area that needs significant focus. As a result of poor insulation and inefficient central heating, much of the energy used in heating a home is lost into the atmosphere. With fuel prices setting records across the globe, further innovation is needed to improve our daily output.

DespiteUK property comprising some of the most up to date construction methods, the sector represents around 14per cent of the countries annual emissions. As a result of this, the Government is targeting a reduction of around 7.5per cent by the end of 2050, a sizeable target when we consider the size of the population.

So, you maybe thinking, how might this impact a landlord?

To begin with we will see a change to energy performance rating’s, which currently require landlords to record an ’E’ rating before the property can be rented.From 2025, the government is looking to change this to a minimum ‘C’ rating for all new tenancies, with existing ones requiring this change by 2028. Any landlords that fails to comply can expect up to a £30,000 fine for each failing property.

The impetus to improve ratings will fall in the lap of most owners, through higher standard glazing and insulation. At the time of writing this article there are no plans from the government to help fund these upgrades.

With older properties yielding the potential to swallow most of the long-term return a landlord may expect to secure, more investors are looking to place their cash in newer developments. Lenders too seem to be sharing this sentiment, with Aviva making over £1BN available to developers over the next four years to use in newly developed sustainable property.

It's clear that new build property really does offer investors the best option. With cladding issues continuing to worry property owners, newly built, EWS compliant developments offer the most secure option. With environmental pressure only going one way, the next few years will be crucial for any landlords looking to make a return.

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