Motivating a greener developer

By Sabinder Robinson-Sandhu 22nd November 2022

A recent Savills report stated that “policy stability and long-term vision from the government is needed to enable the real estate industry to make a smooth transition to a low-carbon economy.”

As things stand, developer motivation for producing more energy efficient residential properties is low. The costs are high, the challenges are unknown and the demand for the end-product is weak.

The question that remains is what will shift that mindset?

We are already seeing the government setting standards to help meet their net zero targets; measures like moving the minimum EPC rating on owner occupier homes to C by 2035 will leave developers with no choice but to be forward thinking.

As is so often the case however, policies like these conflict with the reality of things. There are anywhere between 15 – 26 million existing properties in the UK which need retrofitting to comply to these new measures but choosing to refurb may become a double-edged sword for the ‘green’ developer.

Whilst the emissions released during the entire lifecycle of a refurb are far lower compared with a new build, the cost implication of upgrading a site to comply with new measures can be crippling for the developer.

As the price of standard construction materials skyrocket and profit margins are squeezed, many developers may find that, refurbishments which also comply with new regulation are no longer viable.

The picture for ground up developments isn’t much brighter with the option to build sustainably and offset the construction emissions potentially being unfeasible.

More sustainable building means investment in more technology, and naturally, more money spent.

With an additional risk of the unknown and no ‘stick’ pushing developers into adopting sustainable methodology, it is likely that most developers will play it safe, keeping to what they already know.

For those that do want to take a proactive approach to greener development, the challenge comes around the recruitment of the right skills.

Labour shortages are prevalent in the sector anyway but, with fewer people having knowledge of non-standard construction methods, there will be limitations around training and resourcing projects with environmental techniques.

There is undoubtedly a difficult balance to strike. The commercial market is taking greater strides to push ahead because there is a more definitive long term cost benefits to the end users.

Comparatively, the residential market sits far behind with buyers prioritising price over and above sustainability which will typically come at a cost.

The combination of low demand and low motivation on the developers’ part will mean that the government will need to work harder and faster to incentivise a change.

Until then, building a greener future is a joint responsibility which we all should be paying attention to.

Sabinder Robinson-Sandhu

Sabinder is Head of Operations and Marketing at Avamore Capital. Having joined the firm in April 2018, Sabinder has been key in the growth of the business, driving core strategies to build Avamore’s brand in the market and leading on operational changes to implement business efficiencies.