Partner Article

New building rules enforce the need to pay now, save later

The announcement by the government of the new Part L Building Regulations might be a yawn to many but it is probably one of the most important bits of current legislation within a construction-led economic recovery.

The measures coming into force in April 2014 mean new homes and non-domestic buildings will have to include energy saving features such as better fabric insulation and more efficient heating and lighting.

However, the massive issue of an existing property’s energy efficiency and embodied carbon remains unanswered. It also leaves open for debate in this region the affordability of new buildings.

For some time the Royal Institution of Chartered Surveyors (RICS) has implemented research into whether or not the market is prepared to pay for the improved energy efficiency in new buildings – and the jury is still out.

Energy efficiency puts up construction costs and therefore the market price. Will the occupier be prepared to pay for that extra cost and thus gain the benefit of reduced annual revenue costs of energy in heating and lighting the home or factory?

I think that the simplistic answer is yes, provided there is a good annual return from the extra capital paid from the annual saving in running costs that are achieved. But the market is neither so simple nor transparent. How many home or factory buyers understand, or are even given this advice by their advisors?

The pressure of energy costs on household income or production costs in manufacturing is emerging. It is certain that energy costs will increase (notwithstanding the ‘fracking’ effect) so we must look critically at the property that we occupy or buy. Is it energy efficient? Will the price that is paid be ‘value for money’? Perhaps the drive to build new homes is price conscious; that is the lower the price the better the affordability. But is it? Paying a lower capital amount may impose much larger annual running costs for energy.

It is up to my profession to lead the debate and be a lot more transparent in the advice given to clients. For example, the price of a house or factory may be the ‘market value’ but when compared to another in costs of operation, is it a prudent purchase? If the purchaser makes a conscious decision that a low capital cost will result in high operating cots then that is a conscious decision based on evidence. But if guidance about the realities of the capital/revenue implications is not provided then that important decision cannot be made.

While the government’s Green Deal campaign has not taken off as envisaged, the legislation around it may be the driver that makes the market and advisors wake up to energy efficiency. We already require an Energy Performance Certificate be provided to purchasers and tenants before a property is offered on the market. And from April 2018 any property which falls below category ‘E’ EPC cannot be let or disposed of until the energy rating is improved.

Hopefully, this is the ‘stick’ that will encourage all of those involved to appreciate why we need things like Part L Building Regulations to work, and I look forward to those in my profession taking the lead in the future.

This was posted in Bdaily's Members' News section by JK Property Consultants .