Sustainable tourism insight – property considerations
In the third insight of our series on Sustainable Tourism, Ben Neary, Partner at Trowers & Hamlins, looks at property considerations and the impact of the 2050 net zero commitment.
Sentiment on environmental sustainability at public, institutional and government level is changing remarkably quickly. What has for so long been the preserve of a few lone voices is now backed by public opinion, which is firmly behind positive action on the way in which we approach our impact on the environment.
This shift is being reflected in both governmental and corporate policy across that UK, and the government's 2050 net zero commitment will undoubtedly be a guiding principle which will affect the direction of future policy and legislative agendas. To meet the challenges that will come along with this, businesses need to be ready willing and able to adapt, and this will mean adopting fresh approaches to the way in which they conduct their affairs and interact with others.
In the property industry, the concepts of sustainable building, green leases, and environmental responsibility have been kicking around for years but, as with most other industries, they have been niche areas to which most have only played lip service. No longer – sustainability, and environmental responsibility has now become a mainstream issue, with property developers, investors and occupiers all acknowledging they have a role to play in improving the industry's environmental impact. Environmental performance benchmarks such as the Real Estate Environmental Benchmark and the GRESB Benchmark have led to environmental and sustainability issues to be entrenched within property investment decisions and owners are starting to see environmental considerations taken into account on valuations, with buyers less interested in stock which is likely to fall below the increasingly stringent environmental performance considerations.
What does this mean?
Forward thinking occupiers - who want to ensure that their properties are energy efficient, sustainable and fit for purpose are more likely to find landlords who are open and willing to engage.
Green Leases - which allow owners and occupiers to carry out works to improve the environmental performance of buildings, are likely to become more prevalent, allowing occupiers to (amongst other things) install solar panels or even drill bore holes, and to ensure that a sensible (and, importantly, a sustainable) approach is taken to the removal of tenants' fit outs at the end of a lease term.
Developers and funders - are more tuned into the issue, with environmental performance and sustainability at the heart of the design of new stock, and key part of the planning framework.
The key, as with most things, is to plan ahead and be ready to adapt. Before you take on a 20 year lease, or invest in a plot of land, you need to be thinking about what you may need to do in the next 10 of 15 years in order to stay ahead of the game. Do you have the necessary rights to install solar panels, or the latest wind turbine? Will your landlord or neighbour allow you to drill bore holes? Even if you have the necessary rights, where will the responsibility for maintenance lie, with the occupier or the owner? Will your proposals invalidate any existing guarantees or insurance? Taking these things in to account in advance can avoid a lot of headaches further down the line.