Apr 25 2024
Sustainability in Property: Balancing Profitability and Environmental Impact
In this episode of The Property Podcast, Stephen Emerson of The Business Magazine is joined by real estate finance expert Lee Merrifield from MSP Capital who are specialists in development finance, Iain Delaney the CEO of housing developer Captiva Homes, and David Thomas from Vail Williams focusing on energy and sustainability.The episode is a discussion covering: Increasingly stringent building regulations are pushing housebuilders towards net zero homes, though the industry has historically been resistant to added regulation.Biodiversity Net Gain regulations are now factoring into land deals, with the preference being to deliver the 10% gain on-site rather than offsetting.Challenges include the array of technology options, supply issues, and balancing sustainability with profitability for SME developers.Lenders are starting to require minimum EPC ratings and factor sustainability into funding criteria.For SMEs, the added costs of sustainable tech can impact scheme viability and access to funds.Currently, sustainable features largely just allow developers to recover the incremental costs rather than boost profits.However, there is an expectation that over time homes with lower operating costs will improve mortgage affordability assessments.Local authorities often lead on sustainable office refurbishments.Notable sustainable residential projects mentioned include Wellborne Garden Village and its water source heat pumps.Successful commercial examples are Lakeside North Harbour in Portsmouth and the Reading International Building campus refurb.There is increasing prioritization of mental/physical health amenities like gyms, outdoor space, air quality.This enhances productivity, staff retention and commands rent premiums.Minimum commercial EPC standards, green leases, and climate risk planning on the horizon.In residential, the Future Homes Standard in 2025, grid decarbonization, and battery storage will drive change.Overall, sustainability criteria will become more embedded in funding sources.Connect with the panel:Stephen Emerson - https://www.linkedin.com/in/stephen-emerson-b176a912/ - https://thebusinessmagazine.co.ukLee Merrifield - https://www.linkedin.com/in/lee-merrifield-27ba1281/ - https://mspcapital.co.uk/ David Thomas - https://www.linkedin.com/in/david-thomas42/ - https://vailwilliams.comIain Delaney - https://www.linkedin.com/in/iain-delaney-91471b80/ - https://captivahomes.co.uk