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Office buildings in Scotland face new energy efficiencies
Proposed new rules aimed at improving the energy efficiency of commercial properties in the UK which could have significant financial implications for owners of older buildings, have been published by the Scottish Government. The draft regulations, the Assessment of Energy Performance of Non-Domestic Buildings (Scotland), are scheduled to come into force in September this year and mean that properties must achieve a minimum energy performance level, most likely an E rating based on current Energy Performance Certificate standards. It means that commercial properties with an EPC rating of F or G may require expensive energy improvement works to meet the new minimum standard. A similar minimum energy efficiency standard is already in operation in England but the Scottish proposals differ in a number of key respects and some fear these inconsistencies will have a negative impact on the commercial property market in Scotland. Generally speaking, the Scottish regulations will apply to all commercial property with a floor area greater than 1,000 square meters. While detailed guidance on proposed exceptions is awaited, only buildings already requiring an Energy Performance Certificate are intended to comply. With few exceptions, a sale or grant of a new lease on a qualifying property will trigger the need to meet the new regulations, so the owner must provide a prospective buyer/tenant with a formal action plan detailing how the energy performance of the building can be improved to meet the statutory minimum rating, according to Liz Stewart, a partner in the commercial property team at Stronachs LLP. She explained that action plans, which bring another additional cost, can be produced by a qualified member of an approved organisation, and will assess greenhouse gas emissions and energy performance. Works needed to improve the energy performance of the property to the minimum standard must be identified in the plan which, once agreed, will be added to a statutory maintained register. If improvement works are needed, the owner has two options; to complete the upgrades within 42 months, or defer the works. In the interim, the owner must keep an accurate record of the property’s energy consumption via a Display Energy Certificate, which must be registered annually, with a view to reducing the energy consumption of the property concerned. ‘Responsibility rests with the property owner. Failure to comply can result in a penalty charge and responsibility for enforcement will lie with each local authority in Scotland. In most cases, it is hoped improvement works will reduce energy bills in the long term with the cost of upgrades recouped within five to seven years,’ said Stewart. ‘The environmental impact of older commercial properties should also be mitigated. Having said this, some older properties may require considerable improvement works to meet the minimum energy efficiency standard without any guarantee of payback. At least 40% to 50% of existing building stock pre-dates the 1940s,’ she pointed out. Detailed government guidance is anticipated in the coming months, and a number of issues including… Continue reading
Some urban homes values in the US outpacing traditional suburbs
Homes values in some urban areas in the United States are outpacing the value of homes in the suburbs in most top tier metros, new analysis has found. City life is gaining in popularity and high-end condos are popular in Boston, Washington, D.C., Seattle, and other cities with fast changing downtowns, according to a report from real estate firm Zillow. It points out that homes in the suburbs, a longstanding symbol of the American Dream, have typically been worth more, on average, than homes in urban areas. While that is still true in much of the country such as Nashville, Cincinnati, Ohio, and Richmond in Virginia, elsewhere things are changing. The change is most marked in in Boston, Washington, D.C., and San Francisco where the mean value of urban homes has recently surpassed the mean value of homes in suburban areas. And urban homes are gaining ground in Denver, Phoenix, and Chicago. The shift reflects demographic trends of millennials delaying family life and choosing condos, and shifting preferences, as people seek walkable neighbourhoods with urban amenities, the research suggests. It has vast implications for low income people who have traditionally lived in cities to be near services and employment. Zillow recently found that, in San Francisco and Seattle, high income people are making shorter commutes to downtown, while low income people are traveling much further to get to work in the urban core. Zillow based its analysis of urban and suburban home values on a survey of how people define their own neighbourhoods as either urban, rural, or suburban and then used characteristics of those places to extrapolate the results and define ZIP codes all over the country. By looking at home values within those areas, Zillow could see how home values have fared in each type of place over the years. ‘This trend, in part, reflects home buyers' changing preferences, as they seek amenity-rich, dense and walkable areas that are often closer to their workplace,’ said Zillow chief economist Svenja Gudell. ‘In the future, this lifestyle trend will change some suburbs as we know them, and they'll start to feel more urban as buyers move further from city centres in search of affordable housing in communities that still feel urban,’ she added. Nationally, suburban home values grew 5.9% in 2015, while urban home prices increased by 7.5%. In 1997, urban home values grew at 3.8%, slower than suburban values which grew 4.1% that year. On a per square foot basis, home values for urban areas are way up, indicating that people are willing to pay more for less space to live in the city. In Washington, D.C., for example, urban homes in 1996 cost 6% more per square foot than suburban homes. Today, they cost 41% more per square foot. Continue reading
Average UK rents up 1.2% in January compared to the same month in 2015
Average rents in the UK rose 1.2% to £906 a month in January compared to the same month in 2015, the slowest increase in three years, the latest rental index shows. But average rents are some 12% above their pre-recession peak, reaching the highest level on record, according to the data from the Countrywide monthly lettings index. The data also shows that London has seen the largest growth in rents anywhere in the country since 2007, with rents 34% higher than their pre-recession record. Between 2007 and 2016 the average Londoner has seen their rent rise from £966 to £1,295 a month. However, despite rising rents, over the past nine years the majority of the country has experienced rents growing steadily in line with incomes. Average income has increased by 12% since 2007 according to the ONS compared to a 12% increase in average rents. But there is a classic North/South divide. In the North West, North East and Wales the average tenant is still paying less than they were in 2007 by £12 a month. Across the UK as a whole, one in five tenants is still paying less rent than they were in 2007. In London rents have grown well beyond incomes. Incomes have only increased by 10% since 2007 in London whilst rents have grown by 34% fuelled by a lack of supply and high demand. As a result tenants have had to either share, downsize or move further from the centre in order to accommodate this rise, the report suggests. It also points out that at current rates of rental growth the three regions where rents remain below their previous peak will see average rents surpass 2007 levels by the middle of 2016. In these regions landlords have increasingly looked to renegotiate with long term tenants, some of whom have enjoyed years without any increase in their rent. This January more landlords were able to increase the rent for tenants who renewed their contract in the North East, North West and Wales than at any time since 2012. In 2007 the average monthly rent for a home in the UK peaked at £809 before the recession hit. Between the end of 2007 and 2008 the average cost of renting a newly let home fell 11%, equating to a fall in the average monthly rent of £87. This brought the cost of renting the average home down to £720. It wasn’t until the start of 2010 that rents started rising again. ‘Nationally rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises. Across most of London and the South East the slowdown in rental growth is the first since 2010, where rents have been growing for the past six years,’ said Johnny Morris, research director at Countrywide . ‘The most sustainable way of creating a more affordable rental market in London and the South… Continue reading
