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Real Estate Leaders Criticise Government Rollback Of Net-Zero Policies

Real estate leaders are criticising a government decision to scrap policies aimed at ensuring the UK hits its net-zero targets and decarbonises its economy. 

CBRE, JLL and the British Property Federation are among those protesting the UK government’s changing of net-zero policies, saying they will create a climate of uncertainty that is bad for the planet, stymie investment in the real estate sector and slow the process of regenerating towns and cities. 

British Prime Minister Rishi Sunak

Policy changes announced in a speech by Prime Minister Rishi Sunak Wednesday include pushing back the date banning the sale of nonelectric vehicles and delaying the time frame for replacing gas boilers in homes. Regulation requiring all rented residential properties to have an Energy Performance Certificate rating of C or higher by 2028 has also been scrapped, although similar regulation for the commercial sector has been kept in place. 

Sunak said the government was making the changes to prevent individuals from having to bear the cost of a transition to net-zero during a cost-of-living crisis.

The announcement comes as occupiers in the London office market and other sectors have been targeting the greenest buildings, and those buildings' values are proving resilient compared to less sustainable assets.

“[Wednesday’s] announcements on the government's net-zero position will be disappointing to many businesses that, like JLL, are advocating for ambitious climate action, such as through alignment with the UN Race to Zero,” JLL UK Head of Sustainability Emma Hoskyn said in a statement. 

“It is through robust net-zero policies and a stable landscape that the real estate sector, from investors to occupiers, can have confidence in, and capitalise on, the opportunities that a rapid transition to net-zero can provide.”

Rolling back on net-zero commitments will destabilise investment into green skills, sustainable technology and energy-efficient homes, Hoskyn added. It will also derail the opportunities and the security that a green economy and green energy can provide for business and for individuals, she said.

“I want to encourage the Prime Minister not to row back on all the hard work so many of us have invested in moving the UK towards a safer, secure, sustainable future,” CBRE UK & Ireland Managing Director, Sustainability and ESG Kaela Fenn-Smith said in a statement.

“With the business community coming together like never before to drive climate action, we need clarity and certainty. Amidst a cost-of-living crisis that’s left millions struggling, we urgently need to recognise that protecting the environment doesn’t need to come at the expense of hard-working families.

“As someone passionate about economic prosperity, jobs and growth, any backwards shift in policy represents a damaging step and potentially undermines the very future of our economy and life on this planet.”

The BPF also called for more clarity on the road map for decarbonising the UK’s buildings in light of Sunak’s speech and cited the need for investment in towns and cities, which could be slowed as a result of the changes.

“Today’s speech from the Prime Minister was deeply frustrating for the investors and property owners who have already made long term plans and financial commitments to ensure they can play their part in meeting the UK’s climate change commitments,” BPF CEO Melanie Leech said in a statement. “The Prime Minister has said that the Government remains committed to the 2050 net zero target but pushing back planned interim milestones is the opposite of what we need.

“While we understand the need for pragmatism to support households, businesses need certainty in order to invest. Changing the strategic goalposts will deter investment, make the task of meeting the 2050 target much harder and mean more inefficient older buildings are left ‘stranded’ with an economic drag on town and city centres.”

Despite the outcry, one significant London investor said that at the top end of the market, the push to decarbonise buildings was being driven by market forces that are unaffected by government policy.

“Sustainability matters to us and it matters to our customers, so we won’t change our strategy based on what the government does,” GPE Senior Investment Manager Alexa Baden-Powell told Bisnow, speaking the week before the government’s announcement. “We need to be catering to that demand, and sustainability is just good business.”