We need mandatory sharing of real estate energy consumption data in the UK

“The UK’s built environment is responsible for 25% of the UK’s greenhouse gas emissions”, a House of Commons Environmental Audit Committee reported in May 2022 stated, adding that “urgent action is needed”.

Urgent action must, however, be informed by robust data. Government should bring forward legislation to facilitate the real estate market – on the basis of accessing energy data – achieving emission and other consumption reductions which importantly contribute to the UK speedily achieving its net zero goals.

This legislation could be straightforward to operate. Look across to France and the EU. France has had a useful and workable precedent since 2021, Décret Tertiaire lays out mandatory requirements (subject to certain thresholds) for both landlords and tenants to report annual energy consumption data  of  “tertiary space” (which covers buildings used for a wide range of activities including many  commercial uses and for health and education uses). It also requires building owners and occupiers to work jointly to agree an action plan which will deliver  targeted energy consumption reductions by 2030, 2040 and 2050. The European Commission recognises that “Buildings are the single largest energy consumer in Europe”. Its revised Energy Performance of Buildings Directive entered into force in May includes provisions that:

• ensure landlords and tenants can have access to their “buildings systems data”
• look to harmonise energy performance certificate (EPC) data in terms of the metrics and ratings; and
• require that EPCs must be provided digitally and are uploaded onto national databases.

In the case of UK real estate, similar legislation would be a critical catalyst to delivering on the government’s announcement this month at COP29 of a new climate target for the UK to reduce the country’s emissions by 81% by 2035 against 1990 levels as well as its manifesto commitment requiring asset managers “to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement”. Importantly, in these times of straitened government finances, the implementation of UK-wide sharing of real estate energy consumption data should not entail any additional cost to the Exchequer. The legislation need not generate new red tape for government officials.

So how might the sharing work? There should be statutory obligations on:

• occupiers to share utility – such as electricity, gas and water – data in real time with building owners. This could be done via smart meters and an app (or equivalent efficient process). It  would also complement the utilities’ own net zero strategies involving nationwide smart metering.
• the building owners to keep that data confidential other than for their own mandatory sustainable disclosure reporting requirements.

The legislation would replace the well-intentioned but inefficient current patchwork of green leases and other voluntary occupier/building owner collaborative initiatives. By streamlining the system, the government could significantly improve the quality of real estate disclosures. This, in turn, would enable building owners to make greater progress on their transition plans to reduce emissions and also help to deliver lower energy bills for occupiers.

We need government-industry engagement to consider appropriate legislative delivery. In March 2021, the previous Conservative government consulted on mandatory disclosures for commercial and industrial buildings above 1,000m² in England and Wales – on the grounds these buildings accounted for a third of UK emissions from the build environment. The legislation could be implemented on a two phased UK-wide basis, given the Labour government intends “to take a more pragmatic, proportionate, and realistic approach to reaching net zero”:

• The first stage focuses only commercial and industrial buildings above 1,000m², and recognising that in current straitened times it would be unduly burdensome to apply to the residential sector.
• The second phase – extending to the residential sector and other buildings – would dovetail with the implementation of government plans for legislation that delivers on Labour’s commitment to “ensure homes in the private rented sector meet minimum energy efficiency standards by 2030” i.e. EPC rating of ‘C’. The government has announced there will be a consultation later this year with goals of “warmer homes, lower bills, over one million people lifted out of fuel poverty”. Under these plans, residential landlords are expected to be eligible for financial assistance from the government’s £6 billion home insulation package.

Government should legislate on mandatory sharing of real estate energy consumption data. Our real estate sector is crucial to achieving energy and climate goals.