A new lease of life? Investigating UK property investor attitudes to low carbon investment decisions in commercial buildings.

This paper reviews the barriers and drivers influencing energy efficiency investment decisions in the non-residential property sector and examines the effectiveness of recent UK government policy looking for signs of a new lease of life within the sector. A review of both the academic and ‘grey’ literature shows that the primary barrier is the lack of a compelling business case, as buildings with improved energy efficiency do not command premium rents or capital values. The UK Government has introduced policy drivers aimed at influencing change, by requiring the mandatory improvement of poor energy performing buildings and tougher building regulations on new property. To explore the effectiveness of these polices, senior UK based investment decision makers are interviewed, to understand ‘real-life perspectives on how energy efficiency drivers affect the market and their decisions. The interviews reveal that where the business case justifies, investors will take a beyond compliance approach but otherwise there is little appetite for such initiatives. The market is coping with the government’s mandatory approach because the cost of compliance is manageable. However, the relatively low cost of energy within total business costs, means that interest by landlords and tenants in reducing energy continues to be weak and this will present difficulties if policies are extended to capture more properties. Further research is recommended to see whether these conclusions are representative of the wider market.