The current trajectory of the Earth’s health is one that calls for action. Caused largely by the daily amount of emissions released during day to day human activity. To reverse this self-destructive course, it is pertinent for the world to embrace sustainable practices.
This has led global governments to adopt the Net-Zero Paris Agreement. The aim of this agreement is to radically reduce emissions & achieve net-zero by the year 2050. Achieved by matching every ton of Co2 emitted with an equal ton removed from the atmosphere.
With this target in mind, every sector of the economy is under pressure to adapt and adopt sustainable measures. The spotlight is on the construction sector, with buildings accounting for about 18% of global carbon emissions. Not only do investors expect compliance, but the new generation of renters are also environmentally conscious.
The Build to Rent sector is a long-term investment with tenant-oriented management as its unique selling point. Sustainable practices in all stages of the designing, construction & maintenance of a BtR development, are crucial to its overall success.
Many of BtR’s target audience were born between 1990 and 2012. a GreenMatch report shows that those born within that range are 72% more likely to pay more for goods and services of sustainable nature.
Therefore, BtR investors and developers incorporating elements of sustainable practices in their development are making a good decision. For investors & the planet!
Elements of a Sustainable BtR Scheme
During the development of BtR schemes (and at various stages), sustainable practices can be incorporated. Ensuring it is optimized environmentally. The following are elements of sustainable development:
Sustainable Construction
In the lifespan of a BtR development, the construction stage is a period that contributes the most to climate degradation. The carbon emitted and water wasted during the construction is significant. The conventional construction industry accounts for 23% of the global carbon emissions. By tackling this stage, BtR developers can comply with the net-zero targets, appealing to their next generation of renters. Sustainable construction practices like recycled construction materials and modular construction (construction process conducted off-site under controlled plant conditions). The latter having an enormous impact on waste reduction.
Technology and Data Collection
Integrating tech and data collection systems like BMS, IoT, BIM and data structures are crucial to optimising operations. Improving energy use & curbing excessive waste. The benefits of these integrations are particularly suitable for long-term investments like BtR. As, they bring about operational efficiency that reduces the overall operational expenditure and maintenance costs. Also, these integrations bring incredible ease and security to the tenants’ life.
Renewable Energy Source
The most sustainable buildings in the world usually incorporate renewable alternative energy sources within the structure. For example, including solar panels within a BtR is an innovative way to reduce carbon footprint. Also, having an alternative means of energy will save the development significant energy costs.
Community Awareness
With the necessary sustainable measures in place, it’s essential that operators and tenants are well educated and committed to sustainability. This will go a long way in ensuring the decarbonisation goals are achieved. Co-operation between BtR operators and tenants is essential in ensuring proper refuse disposal, energy, and water use.
Cost & Benefit
Whilst sustainability is a noble cause, there needs to be a balance with financial benefits. BtR schemes are still investments and return on investment is the primary goal.
Contrary to popular belief, Oxford University confirmed that sustainability and Environmental, Social, and Corporate Governance (ESG) practices lead to higher profits due to higher efficiency of operating costs.
With the rise in demand for sustainable construction, economies of scale have significantly influenced the cost of sustainable materials. Nowadays, relatively expensive green construction materials have become affordable.
Further, the fact that millennials prioritize sustainable housing over affordable housing with no sustainability; shows the inherent advantages of sustainable schemes. A survey conducted by NMHC indicated that millennials are willing to pay an extra $32.64 a month to live buildings that have earned a green building certification.
So, whilst sustainable buildings cost roughly 2 – 10% more than conventional ones, the expense is balanced out by savings through operational efficiency, energy & utility efficiency, maintenance costs, etc.
Sustainable Regulations
Besides the net-zero target, all sectors are expected to comply with other legal and governmental environmental policies BtR developers are expected to comply with. For the United Kingdom, sustainable building construction and management legislation & regulations; can be found in the following:
- The Paris Agreement and the UK Climate Change ActEnergy Performance of Buildings Directive (EPBD)
- The Minimum Energy Efficiency Standard (MEES)
- The Climate Change Levy (CCL)
- Duty of Care Regulations
Conclusion
Overall, BtR schemes are crucial to driving the positive change of sustainable building in the real estate market. With the balance of sustainability with profitability, it is only a matter of time before other sectors of the real estate market embrace sustainability.
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