South China Morning Post quotes Simon Green on Hong Kong investment into UK property and the UK’s net-zero target
It has been reported that UK-based developers are ramping up sales launches and marketing promotions in Hong Kong as the weakened pound makes British property more attractive. This is evidenced by a number of recent successful launches in Asia by UK developers including one such developer, London Square, establishing a presence in Hong Kong for the first time. However, the possibility of further legislation in the UK relating to Energy Performance Certificates (EPCs) may impact the appetite for certain types of properties in the UK.
Under the existing law, all properties let out under a residential tenancy (whether a new tenancy or a renewal of an existing tenancy) must have an EPC rating of at least E unless an exemption applies. The UK government is currently considering imposing a new minimum EPC rating of C for new tenancies from 2025 and for all rental properties by 2028. It should be stressed that this is currently merely a draft bill and there is still a long parliamentary procedure to go through before the bill receives Royal Assent to become law (if indeed this ever happens).
Simon Green, International Partner, recently commented for the South China Morning Post on the potential change:
"Improvements in the EPCs of homes are planned as a part of the UK’s target to become net-zero for greenhouse gas emissions by 2050. With the implementation of the current regulations in April 2020 requiring minimum EPC ratings of band E for residential tenancies, the potential further increase in minimum EPC ratings to C is likely to be the direction the government is moving in.
Should there be a change to the EPC regime in the UK as indicated above, it will be interesting to see the affect it has on the demand for certain types of property. What we may see is increased appetite from international purchasers for new build properties as such properties typically have a higher EPC rating (of bands A and B) compared to older properties which typically have lower EPC ratings (average rating of band D). Not only will the majority of new build properties meet any new EPC legislation that may come into force without the need for capital expenditure to comply with such requirements but new build properties are also likely to help mitigate against rising cost of living concerns. For example, a recent analysis by Savills calculated that there may be an average saving of 55% on annual core energy costs (i.e. lighting, heating and hot water) when purchasing new build properties over older properties."
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