Sustainability

Question 1

How would you define sustainability?

Answer 1

• UN definition: “ the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs”
• environmental, economic, social

Question 2

What are regulations around sustainability?

NEED TO INCLUDE DATE OF REGS AND EFFECTIVE DATES

Answer 2

• EPCs:
  Energy Performance of Buildings Regulations 2012
• MEES:
  Energy Efficiency Regs 2015
• Building Regs Part L: Conservation of Fuel and Power

Question 3

What are sustainability targets?

Answer 3

• 17 UN sustainable development goals (2015)
• Paris Agreement (2015):
  aim to keep temperature rise this century well below 2 degrees C above pre-industrial levels
• UK Climate Change Act (2018)
  in 2019, gov amended to set legally binding target to achieve net zero greenhouse emissions by 2050

Question 4

What plans around sustainability are there?

MAY NEED UPDATING

Answer 4

UK:
- Industrial Strategy (2017)
- Clean Growth Strategy (2017)
- 25 Year Environmental Plan (2018)
- NPPF (presumption in favour of of sustainable development)

GM:
- Local Industrial Strategy (2019)
- 5 Year Environment Plan (2019)

SCC:
- Climate change strategy
- Carbon management plan
- Local planning policies
e.g. SPD sustainable design and construction

Question 5

What are industry standards on sustainability?

Answer 5

BREEAM / LEED (US)
- environmental performance of buildings through design, construction and operation

WELL
- performance of buildings related to health and wellness

SKA
- RICS standard for non-domestic fit-outs

Passivhaus
- primarily new-build: high level of air quality and comfort using very little energy for heating or cooling

Question 6

What are RICS initiatives around sustainability?

MAY NEED UPDATING

Answer 6

RICS Building Carbon Database
- captures embodied carbon data for whole buildings,
provides free resource to benchmark designs

WBEF
- brings together pros to innovate to create sustainable places for all to live, work and play
- 4 megatrends: urbanisation, natural environment, digital transformation, markets and geopolitics

Futures Report
- how industry responding to change strategically, commercially and sustainably
- focus: talent and skills, data and technology, sustainability

Question 7

When is an EPC required?

Answer 7

• required when built/sold/rented
• if building has roof and walls and uses fixed services to condition an indoor climate
• each unit of a building requires an EPC with a floor area greater than 50sqm
• gov guidance (2017):
  not required for lease renewals; MAY NEED UPDATING
  assignments = sales;
  not-for-value transactions may not need

Question 8

When is a DEC required?

Answer 8

• public buildings with a floor area greater than 250sqm visited by the public frequently
• last 12 months for TUFA over 1,000sqm
• last 10 years for TUFA between 250 and 1,000sqm
• need EPC if sell/let building/part and rating must be displayed on DEC

Question 9

What are MEES?

Answer 9

• aim to improve energy efficiency of UK’s older building stock to meet carbon reduction targets
• from April 2018, new tenancies can’t be granted if a building rates less than E
• from April 2023, LLs will not be allowed to continue to let any building with a rating less than E
• doesn’t apply below 6 months or over 99 years
• enforced by LWMAs (SCC)
• gov guidance 2017:
  may be some transactions don’t qualify as sale/letting e.g. agreement for lease;
  once an EPC expires, further EPC only required next time a trigger point is reached i.e. when next sold/let/modified

Question 10

What are exceptions to MEES?

Answer 10

• standalone buildings with TUFA less than 50sqm
• properties to be demolished
• temporary buildings with planned use time 2 years or less
• listed buildings where compliance would unacceptably alter character or appearance

Question 11

What are exemptions to MEES?

Answer 11

• last 5 years, cannot be passed to new owner on sale
• must register, self-certified
• 7 year payback test (need 3 quotes)
• where building surveyor advises wall insulation not appropriate due to negative impact on fabric/structure
• unable to obtain 3rd party consent
• registered valuer advises reduces value of property by 5%

Question 12

What are some considerations a valuer needs to make in relation to sustainability?

NEED TO INCLUDE DATE AND EFFECTIVE DATE OF GN

Answer 12

“Sustainability and Commercial Property Valuation” Guidance Note 2013:
- physical, social, environmental and economic factors
- pace at which may feed into value depends on type and market
- valuers should reflect markets, not lead them
- should be aware of sustainability features and implications may have on property value in short, medium, long-term
- collect sustainability data as and when available for future comparability even if doesn’t currently impact value
- only where market evidence supports, build into calculation of value
- sustainability checklist (appendix)

Question 13

What is RICS guidance on MEES?

Answer 13

“MEES: Impact on UK Property Management and Valuation Insight Paper 2018”

• strategy to ensure portfolio compliant
• under Red Book, valuers should account for risks including posed by MEES (even if no clear evidence of market value change)
• risks include loss of income as can’t let/vacant building costs/where can’t increase rent
• work with building surveyors to assess works likely
• gov likely to raise minimum standard to D (B/C by 2030?)