It’s been a challenging time for the property market, but one area of the industry is holding firm despite the odds: According to the Royal Institution of Chartered Surveyors, 6 out of 10 real estate agents say homes with high energy efficiency ratings have held their value throughout the overall market slowdown.
The same RICS report reveals that 40% of agents are seeing more interest from potential buyers when it comes to energy efficient homes, and 41% are seeing sellers attaching a price premium to homes with high energy efficiency rating.
With the current generation of first-time buyers more interested in environmental impact than ever, it looks like eco-friendly real estate is paying off – not just for the environment, but for our health, communities, and even property investments.
In response, eco homes are being built from the ground up to prioritise eco-friendly materials and renewable energy, and at the same time we’re seeing traditional homes being retroactively “greenhabbed” to meet the market demand for sustainability.
Read on to discover the benefits of sustainable and eco-friendly housing, as well as some of the trends, regulations and challenges facing developers and homeowners.
The Sustainability Shift
Sustainable purchasing decisions have gained serious traction over the past decade on a global, national, and individual scale. With heightened awareness of the issues affecting the environment, we’ve seen public protests, stricter government regulations, and a marked change in our own priorities when it comes to making investments.
According to US research company Nielsen, 73% of millennials are more willing to pay extra for sustainable products across all industries. This demonstrates that even during a cost-of-living crisis, sustainability is a higher priority than affordability.
When it comes to the housing industry, a 2021 survey from the property services company LRG found that more than half of respondents specifically sought out eco-friendly features in a home such as wall insulation, triple glazing, and renewable energy options.
This opinion was held most significantly by respondents in the younger age bracket, with 61% of 25-34 year olds prioritising sustainability when it came to choosing a home. As this bracket is the immediate future of the property market, developers and investors can future-proof their portfolios by making eco-conscious choices.
What is a Sustainable Property?
Sustainable real estate refers to any property – commercial or residential – that is designed, built and maintained with its environmental impact as a key consideration.
Eco homes are built from the ground up to minimise this impact at every turn, from their effect on the local ecology to the materials they’re constructed from to the energy they use. Their features are designed to provide a high quality of life at a lower environmental cost, with design features that reduce emissions and lower the overall carbon footprint.
Common elements in sustainable properties include high quality insulation, airtight triple-glazed windows, renewable heating and electricity, passive solar facilities, and rainwater harvesting.
Existing homes can also be retrofitted with these features in order to lower their emissions and increase their sustainability. This process is known as “greenhabbing”, and is proven to lower operating costs as well as improve wellness and resale value.
Benefits of Sustainable Properties
Reduced Carbon Footprint
It takes over 50 tonnes CO2 to build an average UK house. And that’s just the start – heating a home and running appliances over its lifetime all add up, with buildings in the UK accounting for 13% of all the country’s carbon emissions.
Given the rising demand for housing, decreasing our housing stock isn’t an option then it comes to combating carbon emissions. However, changing the way we go about building and equipping homes certainly is. From design to procurement to construction to ongoing operation, we can invest in sustainable practices that ensure as little carbon emission as possible.
By reducing emissions, sustainable homes help us on the path toward a greener planet, slowing climate change and promoting a healthier future for our wildlife and our families.
Reduced Running Costs
Energy efficiency is one of the primary draws for buyers when it comes to choosing an eco-friendly home. Renewable energy can reduce day-to-day operating costs and decrease monthly bills by 20-30%. In a time of economic uncertainty, this is a very attractive feature.
As well as affordable heating options such as ground-source heating and heat pumps, home insulation can go a long way toward cutting running costs. Practices such as installing cavity insulation and airtight triple-glazing can have a significant effect on a homeowner’s running costs, providing a more affordable lifestyle ongoingly.
Eco-friendly homes also require less maintenance, as they are constructed to modern specifications to last a long time. Green materials are chosen with durability in mind, so less money needs to be spent on repairs and replacements over a building’s lifetime.
Increased Resale Value
As homebuyers become more concerned with sustainability, eco-friendly homes are increasingly sought after. Buildings that meet high sustainability standards are set to gain a higher resale value when it comes to taking the next step up the property ladder.
This means that a new-build eco home is an excellent investment, and adding sustainable upgrades to a traditional home can increase a house’s value when it comes to reselling. And because green materials are more durable, this increased value is set to last long into the building’s lifespan.
Green buildings don’t just lead to a healthier planet. They help with our health too. As they are designed to maintain both airflow and insulation, their residents will be warmer in the winter and cooler in the summer, and have access to cleaner air across the year, leading to better physical and mental wellness.
The US Green Building Council conducted a 2019 study that showed improved indoor air quality as a key factor in reducing self-reported symptoms of asthma, respiratory allergies, depression and stress. Employees working in green certified buildings reported feeling happier, healthier and more productive.
Sustainable real estate and development aims to meet the needs and market demands of our present generation without compromising the wellness of future generations. Investors and developers who are keen to invest in a better future can look to eco-friendly housing solutions as an essential step toward developing greener communities and changing business practices for the better.
Aside from reducing their own carbon footprints, eco-friendly buildings contribute to creating more sustainable communities and urban areas, reducing the overall emissions. An area with more green housing can develop more green spaces, more efficient waste management and provides a higher quality of life for residents, while minimising environmental impact.
Eco-friendly design and procurement also has far-reaching benefits, using recycled and sustainable building materials rather than extracting new resources. Paired with building methods that prioritise longevity and easy repairs, this promotes responsible consumption and production within the housing industry.
Sustainable homes have only been growing in popularity over the past years, with forecasters predicting further increases going forward. An LRG report suggests that 56% of homebuyers would prefer to buy or rent from an agent with expertise in sustainability, highlighting the need for the whole property industry to move in a more eco-friendly direction.
This demand is only increased by bank and government incentives for buying eco-friendly homes. For example, Barclays has launched “green mortgages”, which offer a lower mortgage rate on certain deals when put toward an energy efficient home.
This incentivisation is likely to normalise eco homes as a choice for first-time buyers and heavily impact the types of homes that are built over the next decade, with developers incorporating eco-friendly features into designs across their price ranges.
Further pressure comes from the government’s Future Homes Standard, which requires new-build homes from 2025 to emit 75–80% less carbon than homes built to 2013 standards. This requires a new approach to construction as a whole, with low carbon heating and high energy efficiency as standard.
Challenges for Developers
Lack of Standardisation
One of the biggest barriers to sustainable development is confusion around standards, regulations and best practices. There are numerous certifications that developers can apply for, but no one universally recognised system. This can make it difficult for buyers to make informed property purchase decisions, and for developers to communicate their eco-friendly qualifications to them.
As eco-friendly best practices are constantly developing alongside government decisions and new innovations, green developers are also under pressure to keep on top of changing guidelines, requirements and terminologies.
Lack of Awareness
While consumers are becoming more and more concerned with sustainability, there is still a general public lack of awareness about the key tenets of eco-friendly living. This can affect the development and sales of eco-friendly properties at all levels, from gaining funding and approval to communicating the benefits of sustainable homes.
More specifically, a lack of awareness within the building industry can make procurement and compliance difficult, with suppliers and construction companies all abiding by different regulations.
For green housing to have a meaningful impact, it needs to be widely available to homebuyers across the socio-economic spectrum. Many lower-income communities cannot afford the latest technologies to upgrade their existing properties with, and therefore miss out on the opportunity to cut their running costs and improve their health and wellbeing.
New-build eco homes need to avoid becoming a luxury option, so that as many homebuyers and landlords as possible can invest in a green future. This calls for a careful balance between innovation and affordability.
Retrofitting Eco-Friendly Features
Meeting the demand of environmentally conscious homebuyers while navigating regulatory challenges will take time, but meanwhile we’re also seeing government assistance for homeowners looking to improve the carbon footprints of their existing homes.
To meet the government’s target of being carbon neutral by 2050, the Chancellor announced last year that VAT would be reduced from 5% to 0% on key energy saving measures such as home insulation, solar panels and heat pumps will be reduced from 5% to zero for the next five years. Such policies will not only make it cheaper for homeowners to make properties more energy efficient, but will add retrofitted eco-friendly homes to the market, taking some of the pressure off developers to meet demand with new-builds alone.
As the UK has one of the oldest building stocks in Europe, with over a fifth of homes being 100 years old or more, efficiently reducing emissions from historic homes is a key concern. A report from Historic England shows that sympathetic retrofitting of historic homes can lead to carbon emissions being reduced by up to 84% in a detached Victorian home and 62% in a Victorian terrace, giving a new lease of life to existing housing stock in an eco-conscious market.
Trends and Innovations in Sustainable Property Development
With the increased demand for sustainable homes comes more investment in eco-friendly techniques and materials, leading to a number of trends and innovations in eco-friendly real estate. These even go beyond specific new-build eco homes, improving the construction of traditional buildings a step at a time.
The use of sustainable materials is one of these trends, with reclaimed wood, bamboo and recycled steel from demolished buildings being chosen by developers to create new homes with a history. These materials are both affordable and less harmful to the environment than new resources, helping to reduce a new home’s carbon footprint.
Renewable energy sources such as solar panels, wind turbines, and geothermal heating systems have been around for a long time, but are becoming more available and affordable on a small scale, allowing homeowners to reduce their reliance on the grid and cut energy costs ongoingly.
A key innovation that’s developed over the last decade is a more nuanced understanding of the “smart home”. Home automation systems can play an important role in reducing emissions a little at a time by turning off lights in empty rooms and adjusting the heating efficiently. Settings can be changed or overridden from mobile apps, giving homeowners more control than ever over how much energy they use.
With consumers and the government alike calling for more sustainable housing options, developers and homeowners have their work cut out for them if they want to keep up. While new green housing developments are appearing around the country, homeowners are also future-proofing their homes with green upgrades to appeal to a more eco-conscious market.
This trend should lead to a surge in eco-friendly homes across the UK that are accessible to a greater number of buyers at a lower cost, continuing to feed their rise in popularity.
The green revolution is well underway, and homeowners, investors and developers are finding more opportunities than ever to cut their costs, increase their return on investments, and create a healthier, happier future for themselves, their communities and the planet.