Uncertainty remains over the UK's path towards zero-emission real estate
The UK government has released a series of announcements regarding its plans to improve energy efficiency, combat climate change, and achieve its net-zero target by 2050.
In a recent development, the government's response to the 2021 consultation on improving energy efficiency through mortgage lenders has been published, though a specific timeline for the publication has not been provided. The government also plans to consult on incentivising mortgage lenders to help homeowners improve energy performance by the end of this year.
One of the key areas of focus is the energy performance of buildings. The government intends to introduce and tighten minimum energy efficiency standards for commercial rental properties, known as 'non-residential buildings.' These standards will be harmonized EU-wide with a common A-G scale for energy performance certificates by 2025 and fully implemented by 2030. The standards will particularly target the worst 15% of the building stock, requiring renovations and upgrades.
For residential properties, the government plans to consult on policies to ensure owner-occupied homes achieve a minimum EPC C rating by 2035, but will not impose significant costs on families. However, the government did not clarify whether a minimum energy efficiency standard will be introduced for smaller owner-occupied buildings.
The phase out of fossil fuel heating in residential properties has been delayed until 2035, with an exemption for properties which are not suitable for low carbon heating, estimated to cover 20% of properties. The government also softened plans to prevent new fossil fuel heating in off-gas grid properties from 2026, moving that date to 2035.
In terms of heating technologies, electric heating is expected to be the main form of heating in new build homes, with heat pumps as the primary technology and a role for low carbon heat networks. The government will consult on low carbon options for off-gas grid properties in 2024, with heat pumps expected to play a prominent role.
The government has increased grants available under the Boiler Upgrade Scheme to £7,500, but the overall pot of funds for this scheme has not increased.
In a shift in approach, Prime Minister Rishi Sunak announced a need for pragmatism and proportionality amidst rising costs in delivering a 'net zero' UK economy by 2050. The government is exploring extending the UK emissions trading scheme to other sectors, including energy use in buildings, which is expected to lead to higher costs for end users.
The Climate Change Committee (CCC) warned in June that UK policy is not being delivered at a fast enough rate for the UK to meet its climate change targets. The CCC stated that a 2035 phase-out date for fossil boilers is potentially compatible with net zero, but the exemption of 20% of households from the phase-out will have an impact on emissions all the way out to 2050.
The government has promised three new consultations by the end of 2023 on the Future Homes Standard technical specification, possibly also on the Future Buildings Standard equivalent, as well as on owner-occupier residential property and on whole life carbon. The government will also publish its 'timber in construction roadmap' this autumn.
Finally, the government has given no indication of timeframes in respect of its review of the material data landscape and data requirements for tracking materials and products for reuse and repurposing. Roof top solar might become a requirement for properties where appropriate, following the government's apparent acceptance of the Skidmore review's recommendation for a 'roof-top solar revolution.'
The government's response to the CCC did not specify whether it will adopt a two-stage uplift for the minimum EPC rating or focus solely on the 2030 target for let property. The government also did not address whether there has been any policy change from that proposed in 2021 for fossil fuel heating in commercial property.
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