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Office buildings in Scotland face new energy efficiencies
Proposed new rules aimed at improving the energy efficiency of commercial properties in the UK which could have significant financial implications for owners of older buildings, have been published by the Scottish Government. The draft regulations, the Assessment of Energy Performance of Non-Domestic Buildings (Scotland), are scheduled to come into force in September this year and mean that properties must achieve a minimum energy performance level, most likely an E rating based on current Energy Performance Certificate standards. It means that commercial properties with an EPC rating of F or G may require expensive energy improvement works to meet the new minimum standard. A similar minimum energy efficiency standard is already in operation in England but the Scottish proposals differ in a number of key respects and some fear these inconsistencies will have a negative impact on the commercial property market in Scotland. Generally speaking, the Scottish regulations will apply to all commercial property with a floor area greater than 1,000 square meters. While detailed guidance on proposed exceptions is awaited, only buildings already requiring an Energy Performance Certificate are intended to comply. With few exceptions, a sale or grant of a new lease on a qualifying property will trigger the need to meet the new regulations, so the owner must provide a prospective buyer/tenant with a formal action plan detailing how the energy performance of the building can be improved to meet the statutory minimum rating, according to Liz Stewart, a partner in the commercial property team at Stronachs LLP. She explained that action plans, which bring another additional cost, can be produced by a qualified member of an approved organisation, and will assess greenhouse gas emissions and energy performance. Works needed to improve the energy performance of the property to the minimum standard must be identified in the plan which, once agreed, will be added to a statutory maintained register. If improvement works are needed, the owner has two options; to complete the upgrades within 42 months, or defer the works. In the interim, the owner must keep an accurate record of the property’s energy consumption via a Display Energy Certificate, which must be registered annually, with a view to reducing the energy consumption of the property concerned. ‘Responsibility rests with the property owner. Failure to comply can result in a penalty charge and responsibility for enforcement will lie with each local authority in Scotland. In most cases, it is hoped improvement works will reduce energy bills in the long term with the cost of upgrades recouped within five to seven years,’ said Stewart. ‘The environmental impact of older commercial properties should also be mitigated. Having said this, some older properties may require considerable improvement works to meet the minimum energy efficiency standard without any guarantee of payback. At least 40% to 50% of existing building stock pre-dates the 1940s,’ she pointed out. Detailed government guidance is anticipated in the coming months, and a number of issues including… Continue reading
Some urban homes values in the US outpacing traditional suburbs
Homes values in some urban areas in the United States are outpacing the value of homes in the suburbs in most top tier metros, new analysis has found. City life is gaining in popularity and high-end condos are popular in Boston, Washington, D.C., Seattle, and other cities with fast changing downtowns, according to a report from real estate firm Zillow. It points out that homes in the suburbs, a longstanding symbol of the American Dream, have typically been worth more, on average, than homes in urban areas. While that is still true in much of the country such as Nashville, Cincinnati, Ohio, and Richmond in Virginia, elsewhere things are changing. The change is most marked in in Boston, Washington, D.C., and San Francisco where the mean value of urban homes has recently surpassed the mean value of homes in suburban areas. And urban homes are gaining ground in Denver, Phoenix, and Chicago. The shift reflects demographic trends of millennials delaying family life and choosing condos, and shifting preferences, as people seek walkable neighbourhoods with urban amenities, the research suggests. It has vast implications for low income people who have traditionally lived in cities to be near services and employment. Zillow recently found that, in San Francisco and Seattle, high income people are making shorter commutes to downtown, while low income people are traveling much further to get to work in the urban core. Zillow based its analysis of urban and suburban home values on a survey of how people define their own neighbourhoods as either urban, rural, or suburban and then used characteristics of those places to extrapolate the results and define ZIP codes all over the country. By looking at home values within those areas, Zillow could see how home values have fared in each type of place over the years. ‘This trend, in part, reflects home buyers' changing preferences, as they seek amenity-rich, dense and walkable areas that are often closer to their workplace,’ said Zillow chief economist Svenja Gudell. ‘In the future, this lifestyle trend will change some suburbs as we know them, and they'll start to feel more urban as buyers move further from city centres in search of affordable housing in communities that still feel urban,’ she added. Nationally, suburban home values grew 5.9% in 2015, while urban home prices increased by 7.5%. In 1997, urban home values grew at 3.8%, slower than suburban values which grew 4.1% that year. On a per square foot basis, home values for urban areas are way up, indicating that people are willing to pay more for less space to live in the city. In Washington, D.C., for example, urban homes in 1996 cost 6% more per square foot than suburban homes. Today, they cost 41% more per square foot. Continue reading
Stamp duty change led to super prime sales in London falling by a third in 2015
The number of super prime £10 million plus property sales in London fell by a third in 2015 as the impact of a stamp duty increase at the end of 2014 made buyers more price sensitive. However, the latest research report from international real estate firm Knight Frank says there are indications vendors have started to factor in higher transaction costs and the annual decline was accentuated by a series of deals before the new rates came into effect in December 2014. The number of Knight Frank super prime transactions fell 16% over the same period as the stamp duty increase meant the transaction tax on a £10 million property rose to £1.1 million from £700,000, or an additional 4% of the sale price. The report points out that the 2014 reform is likely to be followed in April 2016 by a further three percentage point increase for buy to let properties and second homes. However, according to the report the resulting slowdown in activity, there are signs the market has begun to absorb the 2014 changes and asking prices that increasingly reflect the more subdued state of demand have ended the stand-off between buyers and sellers. The report suggests that to some extent buyers and sellers have become tired of the inaction and as asking prices become more realistic, buyers have seen the market is flat rather than falling off a cliff and are therefore encouraged to act. But the overriding mood is one of caution and annual price growth in the super prime market remains subdued, standing at 0.5% in December after a marked slowdown in recent years. However, it is suggested that the safe haven appeal of prime central London property continued to support demand in a year marked by economic volatility centred on events in China and geopolitical concerns around the world. There were mixed fortunes for London’s different prime central London markets in 2015. Kensington and Mayfair continued their upwards trajectory in 2015 and both areas grew their super prime market share and Kensington was the largest super prime market in 2015. The report also points out that the high quality of London’s super prime pipeline is evident in the growing share of new build deals done above £10 million, which has gone from a fifth in 2012 to over a third in 2015. Continue reading
