Sustainability drivers

Financial incentives can be very useful in persuading stakeholders of the benefit of sustainability. They tend, however, to favour the owner/occupier rather than the speculative developer or the surveyor refurbishing an existing property:

• landfill tax: £86.10 per tonne from 1 April 2017 with a lower rate of £2.70 per tonne for inert waste. This is due to increase by the Retail Price Index in subsequent years, which will mean significantly lower increases than over the last 10 years;
• aggregate levy: £2 per tonne on virgin aggregate to encourage recycled aggregate;
• land use incentives: abolishing stamp duty on redevelopment in disadvantaged areas and 150% relief for the cost of decontaminating land through the Landfill Communities Fund (previously known as the Landfill Tax Credit Scheme); 
• lower running costs generally associated with green buildings (MOD headquarters, Abbey Wood, Bristol were predicted to achieve annual savings of £800,000); 
• energy costs: gas has risen by 105% since 2005 and electricity by 64% over the same time. While these have been relatively stable over the last 3 years, inflation has been low and they are still predicted to continue to rise by more than inflation for the foreseeable future – hence political statements by both the Conservatives and Labour over introducing caps on energy prices; 
• feed-in tariffs;
• increased capital allowances on energy saving plant and machinery; 
• Renewable Heat Incentive (RHI): there are 2 phases to the introduction of the RHI. Phase 1: the introduction of the RHI for non-domestic installations in the industrial, business and public sectors, which opened in November 2011. Phase 2: the domestic element of the RHI, introduced in April 2014, which allows domestic users to back-claim RHI from 15 July 2009. The scheme will support air source heat pumps, biomass systems, ground source heat pumps and solar thermal technologies such as vacuum tubes, with tariffs paid for 7 years (note this is not open to new dwellings other than self-build homes);
• Carbon Reduction Commitment energy efficiency scheme.

Investor pressure

There is increasing demand from investors for sustainable buildings to match the demand from the end consumer:

• Ethical pension funds are now worth over £6 billion in the UK and growing.
• FTSE4Good Index in the UK only includes companies with good standards of environmental performance.
• Large UK institutional funds are increasingly expecting high environmental and social standards in their investments. The Prudential stated in 2002 that 'corporate citizenship would be at the heart of everything we do and how we relate to our business partners'. Corporate Social Responsibility (CSR) is far more prevalent in investor approaches than it was even 5 years ago, and more sustainable property is one way of benchmarking and measuring improvements. Most institutional funds now require a sustainability rating as part of new developments in which they invest (e.g. BREEAM Very Good or Excellent, EPC ‘A’ rating) even if not required under planning obligations. This is to ensure that they do not reduce the potential occupier demand but also to future-proof their investments.
• Research into the added value of buildings that are 'greener' than others is scant, but a recent report from the US has concluded that the more energy efficient 'green' buildings attracted rents around 6% higher than traditional buildings.
• IPD launched in February 2008 its IPD Environment Code, a tool to assist property holders and users in measuring their ongoing energy usage.