The benefits of investing in sustainable property
Investors have a lot to think about when choosing a new property for their portfolio. Issues like cost, functionality, build time and style can all have an impact on whether a potential investment will provide the returns they're seeking.
In recent years, however, another element has become increasingly important in a property investor's considerations: sustainability. These days, environmental concerns are adding increasing weight to an investment's potential, and this demonstrates how people are taking a longer-term perspective on the way we live.
According to Blue and Green Tomorrow, there have never been more ways to make eco-friendly investments than today. Investors can choose from projects like sustainable energy or biofuels - so why is property investment the best choice?
For one thing, it has mass-market relevance and needs a lot of money to move forward and become more mainstream.
Sustainable property - buildings with features like high levels of thermal wall insulation, double or triple-glazing, efficient boilers and renewable energy sources - is a fast developing area. However, it's likely to be many years before supply meets demand, which means that investing in eco-friendly properties now could yield excellent returns over a prolonged period - especially since sustainable properties tend to attract higher monthly rents.
Sustainable properties come in a variety ot types as well. New-build properties all must meet certain levels of energy efficiency, while refurbishment work can bring new life to old buildings that were once run-down and inefficient. For investors who like to put in the refurbishment work themselves, another option is to buy a fixer-upper and create an eco-friendly property with thermal insulation, efficient white goods, solar panels and new windows.
Of course, it's not just residential properties that can benefit from energy efficiency. Commercial properties ranging from warehouses and factories to offices and retail shops also need to be energy efficient. Businesses are increasingly motivated to seek out sustainable premises, since being in an environmentally friendly location can boost a company's reputation, help it attract customers and win grants.
In coming years, legislation will add pressure to property investors, making it no longer a choice to be energy efficient. So, it makes sense for property investors to choose properties that will meet the new regulations.
From April 2018, all rented properties will be required to have an Energy Performance Rating of E or better. This means that draughty buildings without thermal insulation and inefficient boilers will need to be upgraded or landlords could face hefty fines.
In April 2016, residential tenants will also be legally protected if they ask for energy efficiency improvements to be made to a property, and the landlord will not be able to refuse any reasonable request.
When it comes to making a home more environmentally friendly, thermal loft and wall insulation are very important. In the UK, triple glazing is also gaining popularity, although some experts recommend keeping double glazing on south-facing windows. Foundation insulation can help to stop heat loss through concrete pilings, while grey water recycling is also something to consider.
Investors should also be sure to look at the property's lifespan. After all, the building process has a significant environmental impact so sustainable buildings should be built to last.