The Government is calling on interested parties to submit a response on the website, suggesting which regulations should be scrapped, merged with other regulations, simplified, or improved.

In the recent Budget Report and Plan for Growth document, the Chancellor outlined proposals to reduce the number of UK regulations in an effort to boost economic growth. (Click here for further details.) This ‘Red Tape Challenge’ is the first step.

There are 21,000 regulations in the UK, and these will be grouped into themes on the website. Every 1-3 weeks, the Government will publish the regulations that relate to a specific sector (‘themes’), with interested parties given a set amount of time to comment on them. The Government will then collate the comments and, after the theme has been closed for public comment, the relevant government departments will have three months in which to justify the continued existence of the regulations called into question. The Government will then decide which regulations should stay, which should go and which should change. All regulations that are to be repealed will be listed on the website.

NB: regulations regarding tax and national security are exempt from this project.

At the time of writing, the timetable for comment is:

7 April – Retail;

6 May – Hospitality, food and drink;

20 May – Road transportation;

2 June – Fisheries, marine enterprises and internal waterways;

16 June – Manufacturing;

23 June – Healthy living and social care;

7 July – Media and creative services;

21 July – Utilities and energy;

4 August – Rail and merchant shipping; and

18 August – Mining and quarrying.

Each of these themes will be split into topics. For example, the current theme, retail, is split into Sunday trading, hallmarking, weights and measures, and so on.

The project is also divided into six “cross-cutting themes”. Government departments must comment on these themes every four months. These are:

1. Employment law;

2. Pensions;

3. Company law;

4. Equalities;

5. Health and safety; and

6. Environment legislation.

The project is expected to run from April 2011 until April 2013.

To read the Government press release which launched the Red Tape Challenge, please click here.

This environmental assessment will be “voluntary”, but the Government intends to produce one environmental report per region. It will then be consulted on, in line with the process laid down in the Environmental Assessment of Plans and Programmes Regulations 2004, in order to help local authorities identify issues relevant to their areas and policies or initiatives in the regional strategies which are no longer in effect.

The Government intends to abolish the regional strategies through the Localism Bill, and the environmental assessment process will be carried out during the Bill’s parliamentary progress.

The three-stage hierarchy in the definition of “zero carbon homes” comprises the following: energy efficiency, carbon compliance and allowable solutions. This Report deals with carbon compliance (i.e. the minimum level of on-site renewable energy generation or directly linked heat networks.)

The Report, which confirms the findings and recommendations of the Zero Carbon Hub’s December 2010 interim report, states the following:

1. Technical issues: The Government’s proposal to reduce carbon emissions for new homes from 2016 by 70 per cent against 2006 standards will not be achievable for many types of dwelling. This is because the main technology for on-site low or zero-carbon electricity generation – solar photovoltaic panels – is not suitable or sufficient for all sites;

2. Commercial issues: Housebuilders will have to meet the additional costs of compliance, and savings will have to be made through reductions in (1) land prices, (2) local authorities’ planning requirements, and (3) regulatory burdens. There are also the problems of new home purchasers being unwilling or unable to pay more for the property, and whether housing development schemes will remain commercially viable; and

3. Other issues: The Report stated the following:

a) It should not be necessary for each individual dwelling on a housing development site to achieve the carbon compliance limit, so long as the aggregate limit is achieved by the development as a whole. This will help to provide more flexibility;

b) The carbon compliance limit should apply to built performance (post-construction) and not designed performance;

c) The Government should take into account the weather assumptions it uses for carbon compliance. This is because regional weather patterns make a significant difference to actual carbon emissions from otherwise identical homes. At present a standard national weather assumption is used to demonstrate compliance; and

d) In the light of the Government’s commitment to ‘localism’, there should be no local power to set a different limit for carbon compliance or to make other related stipulations. However, the Report also provides proposals in the event that the Government decides to allow local powers.

NB: These recommendations do not relate to non-domestic property.

Conclusion

The Report highlights that the housebuilding industry must change significantly in order to achieve the carbon compliance standards. This will inevitably have an impact on all aspects of the housebuilding process, including planning, design, construction and energy products.

The Zero Carbon Hub has called on the DCLG to give a prompt response to its recommendations for carbon compliance, so that the housebuilding industry has sufficient time to prepare to meet the 2016 target for zero-carbon new homes in England.

The Green Deal, which is included in the Government’s Energy Bill, will allow homeowners and businesses to take out loans to improve the energy efficiency of their properties (e.g. through cavity wall/loft insulation, heating and lighting improvements.) The loans will be paid back over a fixed period through the savings that the property owner makes on his or her heating and fuel bills.

However, many people are unaware of this scheme, and a new CBI survey has suggested that three-quarters of the general public do not even consider the energy efficiency of a property when buying or renting a home. The CBI’s concerns and recommendations for making the Green Deal work can be read here.

There have been some other developments in February concerning the offering of greater financial incentives to make the Green Deal more appealing:

1 February: The Housing minister Grant Shapps said that the Government may extend the Green Deal scheme for energy efficiency improvements to new-build homes (rather than just existing homes.) He said that the Government would consult with the housebuilding industry on how the scheme could be adapted to help housebuilders meet the costs of building a zero-carbon home. Housebuilders have indicated that they would be keen to use Green Deal money to make zero-carbon housing developments more viable.

14 February: The Financial Times newspaper reported that that the Chancellor of the Exchequer, under pressure from the Department of Energy and Climate Change (DECC), is considering giving homeowners a rebate on stamp duty in return for them joining the scheme and making their properties more energy-efficient. This move, which could be announced in the spring Budget, has been backed by a number of companies and organisations, including Marks and Spencer and the British Retail Consortium. The CBI has also admitted that changes to stamp duty may be necessary in order to encourage take-up of the scheme.

Further details of the Green Deal scheme (including the financial benefits to property owners) are here.

The Energy Bill does not contain any provisions that force landlords of both domestic or non-domestic properties to sign up to the Green Deal and make energy efficiency improvements; however, the Bill does contain powers for the Secretary of State to create regulations at a future date should it be deemed necessary.

The Energy Bill is currently being debated in the House of Lords, with the DECC anticipating that it will be consulting on draft secondary legislation for the implementation of the Green Deal in autumn 2011.

In order to comply with the forthcoming Directive, the Government published a consultation paper in March 2010 on improving the use of energy performance certificates (EPCs) and their data. It proposed broadening the scope of (1) EPCs to include Houses in Multiple Occupation (HMOs) and holiday lets, and (2) display energy certificates to include commercial buildings.

The Government has studied all the submitted responses, published a summary of them, and now plans to do the following:

1. Make all EPC data publicly available (e.g. the property address, EPC rating, and EPC recommendations.) This goes beyond the Government’s initial proposal in the consultation paper;

2. Require landlords to provide an EPC when granting holiday lets of more than four months. Presently, an EPC is not required for the short-term letting of holiday accommodation;

3. Require property advertisements to contain the EPC rating from July 2013;

4. Encourage the owners of commercial buildings to voluntarily obtain display energy certificates;

5. Require air conditioning reports to be lodged on the non-domestic EPC register in England and Wales; and

6. Consider whether to clarify when an EPC is required.

The consultation paper had proposed forcing landlords to provide an EPC for the entire building when only one room in an HMO is rented out, but the Government has decided against this.

These proposed reforms will have big implications for building owners and managers, as they impose on them further obligations. Also, by making EPC data publicly available, the Government has made it much easier to check whether building owners are implementing energy efficiency measures. This will enable the Government to identify any improvements that need to be made so that the UK meets its emissions reduction targets.

Back in December 2009, Adrian Penfold, the head of planning and environment at British Land, was asked to review the regimes for obtaining non-planning consents for property development projects. In July 2010, after considering the evidence submitted by interested parties, he made 12 recommendations that aimed to speed-up decision making, reduce duplication, and reduce bureaucracy in determining non-planning consents. I summarised these recommendations at the time.

In its formal response, published on 3 November 2010, the Government has generally welcomed the Review’s recommendations and plans, amongst other things, to take the following key actions:

1. Set up meetings to allow consenting bodies to share examples of best practice;

2. Encourage local authorities and other public bodies to publish their performance data to promote transparency;

3. Ensure that public bodies co-operate with businesses in their efforts to develop in an environmentally sustainable way;

4. Produce a quality development code by spring 2011;

5. Provide developers with a contact at the Highways Agency who will work with the developer, local planning authority and local highways authority;

6. Improve access to information;

7. Merge conservation area consent with planning permission, when possible;

8. Consider whether any changes to the village greens registration system are required; and

9. Expand the Environmental Permitting regime.

The Government accepts that it needs to clarify the boundary between planning and non-planning consents. It believes that it can achieve this through reforming the planning system (as outlined in October’s White Paper, Local Growth: Realising Every Place’s Potential and the forthcoming Decentralisation and Localism Bill, which will require local authorities to produce local development plans.) The Government will also monitor the operation of development consent orders, and continue to look at options for merging highways consents with planning permission.

These proposals are encouraging for developers, but the recent spending cuts and lack of detail may contribute to the policy ‘vacuum’ that developers have had to put up with over the past few months. Click here to read about Cala Homes (South) Ltd’s successful judicial review of the Government’s decision to abolish the Regional Strategies.

The next stage

The Government will publish an update to its response in spring 2011, after assessing how much progress has been made in implementing these changes.

Although the working party that set up the consultation concluded that, on the basis of the responses received, there was insufficient consensus on how to address CRC issues in leases, it did say that it would produce a revised version of the Carbon Reduction Commitment: A Guide for Landlords and Tenants, which it originally published in June 2009.

On 3 September 2010, the updated version of the Guide was published by the British Property Federation. It discusses the following:

1. How the costs of the CRC can be apportioned between landlords and tenants. This is because the CRC Energy Efficiency Scheme Order 2010, which came into force in April 2010, does not oblige landlords to pass CRC costs on to their tenants, or to share with their tenants the benefit of any Revenue Recycling Payments that they receive;

2. Issues that are likely to arise when the ownership of a building changes; and

3. The advantages and disadvantages of four possible methods for incorporating CRC provisions into leases. These include adding the cost of a CRC to the normal service charge; running a separate CRC service charge; charging a levy on energy costs; and leaving the lease silent on the CRC (or specifically providing that the landlord will not require a contribution to its CRC costs from tenants.)

If you have any queries about this, or anything else CRC-related, please contact me at joe.kwok@mablaw.com.

Last month, I summarised the Government’s approach for ensuring that all new homes are ‘zero-carbon’ by 2016. However, according to recent reports in The Guardian newspaper, this 2016 target is set to be scaled back following pressure from the housebuilding industry.

According to The Guardian, housebuilders have warned that compliance with the Government’s proposals would be “too expensive and impossible to implement for many flats, and would result in a slump in the rate of homes built.” Consequently, according to The Guardian, the Government may water down its target.

However, the Home Builders Federation has responded to these reports by saying that the housebuilding industry is committed to meeting the zero-carbon target, though it wants the Government to ensure that the definition of ‘zero-carbon’, which is due in the next few months, is “practical, deliverable and affordable” so that the cost of building new homes does not accelerate.

The Guardian’s claims appear to be based on comments made by, conveniently, unnamed senior figures at the Department of Communities and Local Government; and, so far, the Housing Minister Grant Shapps has said nothing to confirm or refute this supposed change in the Government’s stance. We will wait to see what happens, but one thing is for sure: any weakening of the Government’s commitment to its zero-carbon homes plan is sure to anger environmental groups.

He announced that the Government will:

1. Introduce a minimum standard for the energy efficiency of the fabric of a building. This would be set through future revisions of Part L of the Building Regulations, in line with proposals suggested in a recent consultation on the Code for Sustainable Homes;

2. Set a national benchmark carbon compliance standard in the Building Regulations. The Zero-Carbon Hub, the organisation with operational responsibility for co-ordinating the delivery of low and zero-carbon new homes, will test new “appropriate benchmarks” for carbon emission reductions over the coming months; and

3. Explore the possibility of allowing builders and developers to fund community energy projects, such as wind farms and district heating schemes, in order to meet their obligations to reduce carbon emissions from new homes.

Despite this announcement, the property industry is still awaiting the Government’s definition of ‘zero-carbon’, which was promised within weeks of it taking office. However, according to reports, a definition may now not be available until November 2010. The British Property Federation has warned that the industry needs a definition urgently, so that it has time to ensure that all new homes are zero-carbon by 2016.

Under the proposals, a person purchasing a house in the lowest energy efficiency bands (probably bands F and G) would have to pay an extra 0.5 per cent levy on top of their stamp duty bill. However, if the new owner upgraded the property to at least a band E within a year, the owner would be refunded the 0.5 per cent (and perhaps also receive a ‘bonus’ payment, as the Government looks to encourage homeowners to make their homes more energy efficient so that it meets its greenhouse gas emissions reduction targets.)

If the Government proceeds with these proposals, it is possible that they could be introduced in just two years’ time as part of the Government’s “Green Deal”, which includes measures to financially help homeowners make their properties more energy efficient.

It is thought that the Government was also considering banning owners of energy inefficient homes from putting them up for sale until they had been made more efficient; however, this idea was rejected as it could “trap” poorer families who couldn’t afford to make the improvements.

If these proposals are accepted, they could have a serious effect on the housing market. Any stamp duty penalties would put pressure on homeowners to upgrade their homes before putting them up for sale, as they would be less attractive to buyers. However, if homeowners can’t afford to make the changes, it may deter them from putting their homes up for sale. Also, purchasers, particularly first-time buyers who may have financially stretched themselves, may be reluctant to buy energy inefficient homes as they may be unable to afford to make the required upgrades in order to get their 0.5 per cent levy refunded.

We shall see what happens…

The consultation asked for feedback on a number of issues, including:

• Whether tenants should contribute towards CRC costs incurred by landlords in relation to the energy used within the tenant’s premises, or in the common parts;
• How CRC costs should be apportioned between different tenants;
• If CRC costs are not passed on to tenants, how landlords and tenants could be encouraged to work together to reduce carbon emissions;
• Whether tenants should provide landlords with the money to buy allowances in respect of carbon emissions, or whether landlords should buy the allowances and charge tenants retrospectively; and
• What should happen if either the landlord or the tenant changes.

If the consultation showed that a consensus could be found, the Working Party intended to create standard clauses for use in commercial leases, which would help reduce the time it takes to grant or review leases, or to agree documentation for the sale and purchase of properties that are subject to occupation leases.

A summary of the responses received during the consultation was published on 7 July 2010. However, after evaluating the responses, the Working Party concluded that there was insufficient consensus on how to address CRC issues in leases, meaning there was little point in creating standard clauses.

However, due to a number of the responses calling for additional guidance on the options open to landlords and tenants, the Working Party has decided to publish a new version of The Carbon Reduction Commitment: A Guide for Landlords and Tenants (originally published in June 2009) in the next few weeks. This updated guidance will outline the CRC issues that need to be considered when drafting leases; set out the different methods by which landlords and tenants could share the costs and rewards of the CRC; and summarise the advantages and disadvantages of each method.

The new EPBD 2010 repeals and replaces the EPBD 2002 from 1 February 2012 and must be implemented into national legislation by 2013.

The key provisions of the recast EPBD 2010 include:

1. Member states must set minimum energy performance requirements for new buildings and existing buildings that are undergoing major renovation (provided that doing so is technically, functionally and economically feasible);

2. The feasibility of using high energy efficient systems (such as renewable energy, cogeneration, and district heating) must be taken into account before the construction of a new building begins;

3. New buildings owned or occupied by the public sector need to be “nearly zero-energy” by 31 December 2018. This will be extended to the private sector by 31 December 2020;

4. Member states must draw up their own plans to increase the number of “nearly zero-energy” buildings, including policies for retrofitting existing buildings;

5. Member states must submit to the European Commission a list of financial incentives to support the implementation of the EPBD 2010; and

6. Energy performance certificates must be displayed in buildings over 500m2 (instead of 1000m2 under the EPBD 2002) that are occupied by public authorities and frequently visited by the public. This threshold will decrease to 250m2 on 9 July 2015. Energy performance certificates must also be displayed in private buildings over 500m2 that are frequently visited by the public.

Whilst the new EPBD 2010 is less onerous than the European Commission’s original proposals, it does significantly tighten energy efficiency requirements and considerably extends its scope by reducing the 1000m2 threshold to 500m2. It will also be interesting to see how the new term “nearly zero-energy” buildings is interpreted and used by the Government.