Property and sustainability - identifying the risk gap

Many studies have sought to establish the direct financial impacts of ecolabels on properties, however, it has also been proposed that the impacts of sustainability issues are more likely to manifest themselves through property risk adjustments over time, depending on the sustainability performance of buildings. Accelerated depreciation of buildings with inferior sustainability attributes may lead to new forms of sustainability-related obsolescence.Under the European Energy Performance of Buildings Directive (EPBD), buildings in the UK are assessed using energy labels (EPCs and DECs), thus providing the property market with signals regarding the energy performance of buildings. The Energy Act 2011 will make it unlawful for private landlords to rent out residential or business premises that do not achieve minimum energy efficiency standards and these will most likely include those that achieve EPC F and G ratings. This legislation is likely to impact on a significant number of buildings.Building on existing theories that investigate the impacts of ecolabels on property values, this study investigates sustainability-related risks that properties in the UK are exposed to. The study will provide a theoretical basis for the impacts that key sustainability drivers are likely to have on the property industry. It will then assess various types of building sustainability risks. Finally, the study will explore which types of properties will be most strongly affected by these risks.The results of this study provide further insights into the scope of sustainability risk-related challenges that properties may face in the future and how such risks can be identified and managed.