The newly elected Labour government is poised to introduce fresh legislation and policy updates aimed at redefining property management and sustainability for the coming decades. For property owners, investors and developers, understanding and adapting to these legislative shifts is crucial for ensuring long-term success and resilience. Whether you are a seasoned investor or a new property owner, navigating these changes effectively will be key to thriving in the evolving real estate market.
According to Labour’s manifesto, homes in the private rented sector will be expected to meet minimum energy efficiency standards by 2030, in line with the ‘Clean power by 2030’ mission. Landlords can take proactive steps in futureproofing property to meet these standards, which will in the long-term enhance the appeal and value of property.
What does ‘futureproofing’ property look like?
Futureproofing property involves designing, building or modifying property to ensure it remains functional, valuable and desirable in the face of future changes and challenges. This approach aims to make properties resilient to evolving trends, technologies, environmental conditions and market demands.
Futureproofing will require most homes to undergo works which are costly and under the previous conservative government, lacked sufficient financial support for landlords. Costs aside, there is evidently a cultural widespread resistance towards upgrading property. Citizens Advice commissioned research to understand homeowners' attitudes towards retrofit measures and willingness to finance these changes – its results revealed that financial constraints, while present, are not the primary obstacle to increased home retrofitting.
Despite this, clear financial incentives have actually shown to increase interest, as nearly 40% of homeowners are more willing to invest in energy efficiency when they understand the potential cost savings.
While awaiting policy updates, Labour’s manifesto offers a promising preview of the initiatives they pledge to invest in, encouraging and facilitating the national shift towards futureproofing property. Here’s what we know so far:
Great British Energy
The government’s focus will be on investing in clean, ‘home-grown’ energy production. Labour pledges to create Great British Energy (“GBE”), a new publicly owned company dedicated to delivering power to Britain. GBE will partner with industry and trade unions to co-invest in leading technologies and support capital-intensive projects. Labour plans to fund GBE with £8.3 billion over the current parliamentary term to aid in the rollout of these projects.
GBE’s projects are expected to enable landlords to upgrade properties with renewable energy solutions as they will also partner with energy companies, local authorities and co-operatives to install clean power projects including wind, solar and hydropower. By participating in these initiatives, landlords can reduce their properties' energy costs and attract eco-conscious tenants and buyers.
The upcoming Energy Independence Act will provide a clear framework for energy and climate policies, and likely will further support these efforts.
Warm Homes Plan
Labour has pledged to allocate £6.6 billion to upgrade five million homes. This substantial funding is designed to make energy-efficient improvements more affordable for landlords and help cut operational costs for tenants, which is especially crucial given the recent spike in energy bills. In turn, making these improvements can help make properties more lettable as renters increasingly prioritise energy-efficiency:
“There are signs that the energy bills surge has made more people, especially renters, aware of energy efficiency. One in five (19%) tenants say it will be a major factor when choosing a home” (Tim Bannister, 2023)
Through the Warm Homes Plan, grants and low-interest loans will also be made available to support upgrades such as solar panels, batteries and low-carbon heating systems. For landlords, this means affordable access to crucial enhancements that can significantly reduce energy bills and increase property value, making properties more attractive to buyers.
Additionally, Labour plans to collaborate with the private sector, including banks and building societies, to offer even more financing options for home upgrades and low carbon heating. This ensures landlords have a range of funding sources for the energy-efficient investments, making it easier to adopt sustainable improvements.
Final thoughts
Labour has assured that you won’t be required to replace your boiler immediately, but several issues still need addressing. Upfront costs will not be entirely eliminated, which could remain a barrier for some. Additionally, the financial benefits of futureproofing may take time to materialise, making it more of a long-term investment rather than a quick fix.
So, yes, there are potential pitfalls in any upgrade strategy, but ultimately, enhancing your property can make it more competitive in the market.
Engaging with these initiatives may significantly boost the value and sustainability of properties. Labour’s plans are designed not only to encourage landlords to contribute to a more sustainable future but positions the UK property market to meet the growing demand for environmentally and socially responsible property investments. These efforts further represent a promising step towards shifting attitudes regarding home upgrades.
