Development Outlook Summer 2023: Policy impacts

Key changes in policy and regulation will shape future design and may impact levels of construction in the short- to medium- term.

Energy efficiency policy

• Changes to Part L (conservation of fuel and power) of UK Building Regulations came into force in 2022, enforcing higher performance targets and an emphasis on low carbon heating systems. 
  
  
• Likewise, the Minimum Energy Efficiency Standard (MEES) amplifies the focus on buildings that are sustainable and energy efficient. The regulation imposes a minimum requirement on let commercial properties of an EPC rating of C (currently an E) in 2027 and EPC B rating in 2030. New private rented residential properties will require an EPC C rating from 2025, and existing tenancies have until 2028. 
  
  
• These new regulations may mean that building designs and construction becomes more complex, demanding more specialised skills and sophisticated materials, all of which will put pressure on building costs. 

Biodiversity Net Gain (BNG) 

• As imposed by the 2021 Environment Act, property and infrastructure developments in England will be required to deliver a mandatory 10% net gain in biodiversity (BNG) from Autumn 2023.

   

• This can be achieved by creating new habitats or enhancing existing ones.

   

• Where on-site delivery is unviable, BNG ‘units’ must be purchased elsewhere.

   

• As we move closer to autumn, supply pressures look likely and, as competition for BNG units emerges, prices will push upwards. It’s possible that this will be a roadblock for development, as a lack of supply slows down the planning process and subsequent construction.