Will MEES be delayed, and the social aspects of BTR and student accommodation

Delaying the 2030 deadline?

Current proposals to introduce minimum energy efficiency standards in commercial buildings have provoked much debate ever since they were first put forward. Even though they are proving to be one of the biggest push factors for retrofitting, much of the debate has been on the timeline for implementation. So, news that the Labour government is assessing the feasibility of the dates is welcome and will hopefully provide more clarity.

As reported by EG, a spokesperson for the Department for Energy Security and Net Zero said they were "planning a review of all aspects of the regulations, including the timelines, to ensure regulations are fair and proportionate for landlords and tenants." As mentioned here, certainty is required for investors and asset owners to make these sometimes-big investments."

Whether the deadline is 2030 or beyond, the industry is moving towards more efficient buildings. A survey by investment managers Patrizia suggests 73% of institutional investors state that ESG criteria is an important part of their investment process, up from 60% two years ago.

However, there is still a substantial challenge ahead, as note in our report. Part of the challenge is mismatched or accommodative planning policy. The Ministry of Housing, Communities and Local Government (MHCLG) launched a survey seeking opinions on updating planning policy regarding the demolition and redevelopment or retrofit of buildings. The outcomes of this will be keenly awaited alongside updated policy direction.

Stuart Baillie , Head of Planning at Knight Frank notes, "it is a positive step to see this coming into the debate as, to date, it has been a piecemeal approach across the country on retrofitting and repurposing. There needs to be a certain level of National Policy to create a level playing field otherwise some Local Authorities won't have the capacity or resource to develop their own local level policies and decision-making will be inconsistent."

He continues that "there cannot be a strict one size fits all approach. Ideally, retrofit should be confined to specific criteria, for example, considering viability and land value, wider public benefit opportunities, heritage value, and other measures. Consideration should also be given to whether this should only apply to specific locations by virtue of heritage, environmental quality, or other criteria.? The potential for stringent rules and technical assessment requirements prior to Planning Applications even being submitted could risk having the opposite effect and discourage retrofit, redevelopment, repurposing from coming forward at all."

Students’ attitudes to ESG and where they live

There is a growing awareness from students towards ESG factors. Our annual Knight Frank/UCAS Student Accommodation Survey suggests that high-quality accommodation underpins positive outcomes for students. Accommodation ranked as the most important factor influencing student wellbeing, with 79% of students surveyed saying that the standard of amenity space in their term-time accommodation is important in supporting their wellbeing.

The overarching theme from this year's survey is the importance of accommodation-based pastoral staff and their impact on student support. For the first time in our survey results, an onsite wellbeing rep or practitioner scored above physical amenities such as an onsite gym when students were asked to rank amenities important to their wellbeing.

The survey results highlighted the role students believe accommodation can play in contributing to surrounding communities and integrating students into the local area. Some 60% of respondents to the applicant survey indicated that their accommodation providers' commitment to inclusivity was important or very important to their choice. Indeed, nearly half of private PBSA residents either agreed or strongly agreed that it was important their accommodation provider is committed to investing in local community projects. This highlights the importance students place on feeling a sense of belonging and community during their time at university.

For developers and operators, this means that as well as designing accommodation that facilitates community, a sense of wellness and belonging, it is also crucial that there is a human element and support touch points in accommodation.

Happy residents drive operational performance

That's the key takeaway from the second edition of our industry-leading Build to Rent Resident Experience Index. On average, our research into nearly 300 complete Build to Rent schemes found that those with the highest scores for resident experience can command a 14% rental premium over the local area. In contrast, schemes that scored lower for residential experience typically achieve rents that are 2% below the local average.

But what drives resident experience? The highest-scoring schemes include six community-focused services, such as communal spaces and resident events; they have an average unit size of 63m2; and excellent ESG credentials - high-scoring schemes had an EPC rating of B or above, low carbon emissions and significantly lower energy costs of ￡5.29/sqm. Social value and resident experience are key pillars of success in BTR. Being able to back investment and operational decisions around these factors with quantitative data is invaluable. See the full report here, including a new look at Local Living Quality and how this interacts with Resident Experience.

$500 billion - Nicola R. 's stat of the month

“By 2050, climate change could cost the real estate industry over $500 billion, according to a new report by GIC and S&P Global. With extreme weather events, rising sea levels, and changing environmental policies increasingly threatening properties—nearly 90% of those in the S&P Global REIT Index may face extreme heat—urgent action is required. The physical risks of obsolesence were pointed to in part one of the retrofit series, further highlighting the need to futureproof buildings by incorporating climate resilience into the strategy.”

What else I am reading

Jennifer Townsend discusses menopause in the workplace and office needs, the pilot version of the UK's Net Zero Carbon Buildings Standard, Schroders Capital Real Estate Impact Fund approved as 'sustainability impact' under new SDR labels, "Carbonvore" buildings, the Deloitte 2024 CxO Sustainability Report indicates there is no retreat from sustainability action by businesses, FT article about the need for the "corporate mindset shift to view sustainability as a matter of competitiveness, not responsibility" and 5G to help reduce energy bills.

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