As I write, the government’s emergency “fiscal event” to get the nation through the winter has not yet been formally announced, but the details have been leaking out via the newspapers as readily as heat seeps out of an EPC ‘G’-rated property.
Stamp duty cuts are still a rumour, but at least it is confirmed that businesses will receive substantial cuts to their energy bills, but only for six months.
Half a year will of course bring us back around to spring again. Less predictable is whether that many months will prove sufficient to see peace restored in Ukraine, and a return to more reasonable energy prices as an equally longed-for side effect.
This week, Property Week has examined several ways in which the energy crisis may shift attitudes and outcomes across the industry.
Most obviously, consumers squeezed into a grim decision between heating or eating may instead rip up their tenancy agreements and try to find somewhere cheaper and easier to keep warm. Evidence gathered by lettings platform provider Goodlord suggests that more than a fifth of renters have already moved as a result of the cost-of-living crisis, while more than a quarter of letting agents surveyed by the firm report year-on-year increases in rent arrears. These figures will surely worsen as autumn shivers into winter.
Elsewhere we assess the impact of energy costs on the uptake of urban heat networks. High energy costs are poised to accelerate uptake of community heating, which is in any case on the government’s wish list as part of the national net zero strategy. And by government wish list, I of course mean that heat networks are increasingly likely to be the subject of regulation and compulsion, via the government’s Energy Security Bill that is currently before parliament.
Rising running costs will also focus minds among property owners. In this edition, we hear stark warnings that landlords who fail to adequately improve the climate resilience and the energy efficiency of buildings in their portfolio may find those assets stranded, sooner than they think. As Knight Frank partner Iain Moss puts it, corporate occupiers are increasingly likely to “refuse to consider space owned by landlords who are unable to demonstrate a credible path to net zero”.
The risk of stranded assets is explored further as we examine the shifting equations that come with rising energy prices, which have turned some sustainability costs into cost savings. Those calculations will of course vary from region to region, and it is hard to avoid the fact that suddenly affordable improvements to a building in London may remain impossible to cost-justify for a broadly similar building in a more northerly city, due to substantial differences in rent.
Naturally, everything boils down to money. As Steve Norris notes in his pithy column this week, if prime minister Liz Truss is to make progress on her economic vision, she will first have to subjugate the Treasury, to tame its habit of snapping the purse shut in the PM’s face.
That, like all these other challenges, may take longer than six months to resolve. We shall no doubt learn more in today’s fiscal event – assuming every detail hasn’t leaked out beforehand.