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Property transactions and the green agenda

Posted on 18th November, 2019

In the last couple of weeks I have attended both the Agricultural Law Association (ALA) Autumn Conference and the NFU Tenant Farmers’ Conference. What was striking were the number of references to the environment at both events.

The green agenda is mentioned in the media on a daily basis, whether it be updates about Greta Thunberg’s activities, stories about why we need to eat less meat or news reports surrounding the recent devastating floods.

We started to see green issues being relevant to property transactions in 2007 when Energy Performance Certificates (EPCs) were first introduced as part of the short-lived Home Information Packs. The requirement for EPCs was then extended in 2008 to include commercial properties and property lettings.

The introduction of the Minimum Energy Efficiency Standard (MEES) from 1 April 2018 was the next step to encourage landlords and property owners to improve the energy efficiency of their properties by restricting property lettings to only those properties which had an EPC rating of E or higher. This is being further extended and from 1 April 2020 it will be a requirement that all let properties (which takes in those properties where the tenants are already in occupation) have a rating of E or higher. There are a few exceptions under MEES but landlords need to have registered the appropriate exemption before it can be relied upon; the clock is ticking in that respect and landlords need to ensure that if they wish to rely upon any of the exemptions they have gone through the necessary registration process by 1 April.

It is likely that the MEES regulations will be further extended and the Government is currently seeking responses to a consultation. The proposal is that the minimum rating will be increased to B with effect from 2030. Whilst this will have an impact in terms of improving energy efficiency in line with the green agenda, those landlords and property owners who need to improve a property which currently has an E rating are likely to need to spend a significant amount of time and money to bring their properties up to the required standard.

At the ALA Conference one of the sessions covered ‘natural capital’. What does that mean? Natural capital is the world’s stock of natural resources, such as water, soil, habitats and living organisms.

The National Planning Policy Framework 2019 states that “at the heart of the National Planning Policy Framework is a presumption in favour of sustainable development, which should be seen as a golden thread running through both plan-making and decision taking”. Developing with nature is now considered a priority and environmental issues are critical in “helping to improve biodiversity, use natural resources prudently, minimise waste and pollution, and mitigate and adapt to climate change including moving to a low carbon economy”.

This follows on from the State of Natural Capital Report in 2017 which reminded us that England’s natural capital is in long term decline, which is costly to both our wellbeing and the economy.

What this means for future developments is that they must deliver a range of environmental and quality of life benefits for the local community, as well as taking account of access, ecology, water and flood prevention.

Another way that the green agenda can impact upon developments is through the imposition of conservation covenants, which allow a landowner to impose positive and restrictive obligations for the purpose of conservation and for the benefit of the public. The Law Commission Report published in June 2014 referred to conservation covenants as something which “should be made for the public good, and for the purpose of conserving, protecting, restoring or enhancing: (1) the natural environment, including flora, fauna or ecological features of the land; (2) the natural resources of the land; (3) cultural, historic, archaeological, architectural or artistic features of the land; or (4) the surrounding, setting or landscape of any land which any of these features”.

The focus is on environmental agreements which can be made between landowners or occupiers and a “responsible body”, which might be a local authority or the Secretary of State. These agreements might require either the landowner or the responsible body to do (or not do) something on the land to achieve the conservation purpose or for the intended public good.

It was pleasing to hear that further efforts are being made by landowners. The National Trust was represented at the NFU Conference and they shared their ideas about carbon capture and restorative agriculture. They are working with their tenants with the aim of achieving productivity but in a wildlife friendly way.

And what of the future? The Agriculture Counsellor at the Embassy of the Netherlands in the UK, Tim Heddema, spoke about the vision of the Dutch Government where they hope to lead the way in ‘circular agriculture’. This idea involves arable, livestock and horticulture businesses using raw materials from each other’s supply chain to reduce waste. It is quite possible that this could be adopted by other countries around the world in a bid to reduce the impact of farming and food production on the environment.

What is clear is that whether we are dealing with commercial buildings, development sites or farms and estates, the parties involved now need to look much closer at the green agenda and they are being required more and more by regulation to incorporate green provisions into plans and working methods.

In addition, there are organisations going beyond what has been legislated for and they are trying to find ways of working with our natural capital for the benefit of all.

Each of these steps is in the right direction and I am certain that we will see many more initiatives in the coming years. Hopefully, the end result will be for the benefit of our communities and the natural world in equal measure.

Nicola Neilson, Partner and Head of Agricultural Property

E: T: 01642 356 500

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