Sustainability measures could impact on property value

20th September 2011

A home's sustainability characteristics should be considered within property valuations, according to a new information paper launched by RICS today.

The issue of sustainability is not currently viewed as important to property market value. However, this is changing and RICS is suggesting that, should a home possess sustainability features which are likely to have an impact on value, this should be reflected in a valuer's assessment of the property.

Sustainability features can include a home's energy efficiency rating, the materials used in its construction and other features such as an energy-efficient boiler.

Although, elements such as a building's proximity to public transport links and its ability to adapt to occupiers' changing future needs could also be considered.

Sustainability, which covers a broad range of physical, environmental and social factors, is moving progressively higher up the coalition government's agenda. It is likely that residential markets will become progressively sensitised to sustainability considerations.

Therefore, RICS feels residential property valuers should be fully aware of the sustainability characteristics of buildings when carrying out a valuation. Also important is consideration of legislation and policy that can influence current and future value.

Ben Elder, RICS Global Director of Valuation, said:

"When calculating a property's worth, the market doesn't always take the issue of sustainability into account, but this could also have been said for central heating way back in the 1970s when people weren't convinced it was going to have a market impact.

"With the increased emphasis on green living and energy efficiency, it is highly possible that the market will need to adapt.

"This new information paper offers advice to our members, recommending that they are fully aware of sustainability policy and the characteristics of individual buildings when valuing property.

"Although market awareness of sustainability has risen significantly, attention is currently focused largely on a home's energy efficiency, propensity to flood and carbon emissions.

"However, a property's sustainable status can cover a range of social, environmental and economic matters that can potentially lead to changes in demand and therefore affect value."

Anwar Harland-Khan, CEO of Sustain Worldwide, an exclusive membership organisation of sustainable developers and industry professionals delivering sustainability, said:

“We welcome the RICS information paper, while noting that in our opinion it is long overdue that the valuation industry recognised the inherent value premium in sustainable property.

“It stands to reason that today’s new sustainable homes have a value premium. They are cheaper to run because they are better insulated and require less heating and mechanical cooling, and they are fitted out with ‘hands off’ energy saving applications.

"What’s more they will increase in value faster, or depreciate less than current stock, because they are more ‘future proofed’ than a conventionally built existing house that will require expensive retro-fitting.”
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