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Collaboration on energy efficiency can tackle the crisis in the UK’s private rented sector, says Iryna Pylypchuk​​, Director of Research and Market Information at INREV.

Earlier this month, the RICS Residential Survey for May once again confirmed continuing expectations for rental price increases, alongside an imbalance between tenant demand and available supply. But when people can no longer afford to live in their homes and houses are not fit for purpose, do we need much more evidence to accept that the UK is facing a housing crisis?

Despite supply gaps being identified across the full spectrum of housing in the UK, for several years the private rented sector (PRS) has been badly affected. This has been caused by lagging housing policy that has failed to adequately react to significant shifts in socio-demographics.

Delays in family formation, rising divorce rates, and an increasingly mobile population have led to sharp demand increases for affordable, centrally located housing units or co-living solutions not only for sale but also for medium- to long-term tenure. And this demand has only been compounded as house price growth and high interest rates in the UK have constrained owner-occupation, particularly among younger or single households, and more recently broadening to middle-income households.

These factors, on top of population growth and rapid urbanisation have fundamentally changed demand for housing across location, tenure, and quantity. This is by no means a problem unique to the UK. Our recent research also highlighted a clear opportunity – and need – for institutional capital to positively contribute to the ongoing housing crisis across Europe. The excess housing demand on the continent requires the rapid acceleration of housing supply across all segments, especially the affordable intermediary PRS.

However, the free market in the UK means that it also has no form of rental regulation and weaker security of tenure – greatly exacerbating existing challenges. For instance, the National Housing Federation (NHF) estimates that approximately eight million have some form of housing need in the UK, and of these, 3.6 million require social or affordable housing.

Bridging affordability and sustainability  

Alongside supply imbalances in the rental market, there are ongoing questions about what should be considered ‘affordable’ rent. In the UK, this is broadly defined as homes let at least 20% below local market rents or let at rates set between market rents and social rents.

However, this unfortunately remains unaffordable to many in

Property Possibilities are Running Wild

Farrer & Co Senior Associate Rebecca Standing considers the options for investors and developers facing the UK’s biodiversity net gain rules.

The requirement to provide 10% biodiversity net gain (BNG) became mandatory in England when Part 6 of the Environment Act 2021 (2021 Act) came into force on 12 February 2024, or 2 April 2024 for small sites – developments with nine houses or fewer on a site of less than one hectare. From this date, all planning permissions issued in England are subject to a deemed condition that the development for which permission is sought must meet the BNG objective.

The UK government guidance describes the aim of the BNG objective as “habitats for wildlife are left in a measurably better state than they were before the development” – which translates into a requirement that the post-development site achieves a net increase in biodiversity of at least 10%, compared to the biodiversity value of the site pre-development. The associated habitat creation or enhancements must then be maintained for 30 years.

BNG metrics and methods

In order to ensure that the biodiversity value of a site is calculated in a standardised way, Natural England has published the statutory biodiversity metric. This is a calculation tool which, with the help of an ecologist, enables developers to calculate the present and projected future biodiversity value of a site, before and after development. It can also predict how much biodiversity value certain habitat creation or enhancement works will create and, as such, is a helpful planning tool.

Examples of BNG delivery are diverse and can include both larger-scale elements – including the creation of dedicated habitat areas, such as wildflower meadows, wetlands, and orchards – and smaller scale elements, such as bird boxes, bee bricks and hedgehog highways. BNG delivery can also be achieved in the construction of the built environment itself, through the inclusion of infrastructure like solar slate, green walls, ground source heat pumps, and rainwater collection.

The required 10% gain can be achieved in one of three ways, or a combination of them, by:

carrying out habitat creation or enhancement works on the development site itself – i.e. onsite creating or enhancing habitats in offsite locations buying statutory credits Offsite or onsite?

When considering which of the three methods to use, it should be noted that the government has made it clear that statutory credits are to be