Letting the greens down

Environmentally friendly buy-to-let homes are good for the planet, but not for returns
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The Independent Online

Developers are trumpeting the care they take with the environment, but buy-to-let investors with a conscience are finding that saving the planet does not make financial returns.

Developers are trumpeting the care they take with the environment, but buy-to-let investors with a conscience are finding that saving the planet does not make financial returns.

The main problem is that vague promises that a house or flat used up a minimum of the world's resources when it was built cut little ice with tenants, says Ronnie Green, the managing director of John D Wood Lettings. "If you ask if tenants will pay extra to live in an environmentally friendly home, the answer is a resounding, 'No'," he says.

The problem is perception: tenants are short-term; buyers are for life. "Payback for environmental improvements can work out at five to 15 years, when the average tenancy is 18 months," says Green. "It is far easier to convince a house-buyer of the merits of saving the environment, because it is for the long term. After all, the very term 'mortgage' means 'debt to the death'."

There are some environmentally friendly features that do add value to a property, says Anne Currell, the managing director of Currell estate agents, "but they need to be visible," she stresses. "I have seen developments with roof gardens, which are eye-catching, instantly appealing and lifestyle focused."

Which means, in effect, that people are prepared to pay extra for things they like, rather than simply because they help the environment. Less visible items, such as triple glazing, condensing boilers, wood from sustainable sources, add cost, but do nothing for tenants, Currell says. But she is more optimistic about the future. "Residents are not enlightened enough to the full environmentally friendly option, but I am sure that will come," she says.

So far, only publicly funded or charitable developers have shown more than a token concern with the environment, in buildings such as the Peabody Trust's dramatic BedZed development in south London and the Greenwich Millennium Village. But, spurred by legislation, developers are beginning to get more environmentally minded. The recent introduction of carbon trading is already having an impact, with Berkeley Homes announcing their first "carbon neutral" development at its West 3 development in Acton, west London. To ensure everyone living there at least nominally cuts down on the fossil fuels they use, the 518 new homes will be signed up to "green" tariffs, increasing the take-up of green energy by one per cent at a stroke - and there will be no gas supply either.

Inevitably, carbon dioxide, the greenhouse gas, will have been generated by the construction process, and this is being compensated for by planting five hectares of trees in the Forest of Marston Vale in Bedfordshire (one of the forests being re-established round the country) and by sponsoring technology-switch programmes intended to reduce the use of fossil fuels, including a microhydro project in Bulgaria. The project is being managed by environmental consultants Future Forests.

Jonathan Shopley, the chief executive of Future Forests, says: "Nearly 50 per cent of CO2 emissions in the UK are created by the construction, maintenance and operations of our homes and buildings. The programme we've developed with Berkeley Homes clearly demonstrates that it's possible to make significant reductions with relative ease."

There is also little financial incentive to cut down on energy use, says Philip Davies, the chief executive of Linden Homes. "There are concerns that the Government is well behind its obligations under the European directive to produce energy ratings on the housing stock of the UK," he says. "Home-owners who have taken measures to reduce energy waste should be rewarded with generous tax breaks. Instead of just using a stick, why doesn't John Prescott dangle a carrot and reduce council tax charges by 10 to 20 per cent for homes where owners have made an effort to reduce emissions or bought an energy-efficient new house?"

West 3 enquiries: 020 7720 2600

Greenwich Millennium Village: 020 8293 6900