It Is Time to Get Sustainable

Sustainability and Net Zero 2050 targets weigh heavy on the minds of many a construction industry professional, from c-suite to on-site.

It’s a topic that’s only going to get hotter in years to come (excuse the pun). As such, we’ve asked a handful of industry talking heads what they feel to be the greatest green issues dictating business decisions now and in the future.

Stuart Murphy, Founder, renewable infrastructure pilot project, TPGen24:

Recent events have proven how fragile our energy infrastructure is and that, in our ambition to reach Net Zero, we’ve become too reliant on intermittent resources like wind and solar. Fundamentally, when the sun doesn’t shine and the wind doesn’t blow, these systems cannot produce energy and inevitably lead to shortages and spikes in electricity prices, negatively affecting the consumer.

As we draw nearer to COP26, we have an opportunity to address this serious issue head on, exploring more reliable, perpetual solutions, such as woefully underexplored tidal energy solutions. The construction industry stands to massively benefit and will play a central role in whatever strategy comes out of this autumn’s discussions. Championing resources such as tidal will present the opportunity for more jobs, greater investment, urban regeneration and establishing an expertise which we can export globally.

Richard Waterhouse, spokesperson, integrated construction information platform, NBS: 

“Carbon reduction has now become a huge focus and many organisations are looking to build their green credentials to ensure they’re doing all they can to minimise their impact on the environment. What we’re already seeing is that the role of data is becoming instrumental in driving down emissions. With access to the correct data, organisations can analyse information, offering up-to-the-minute reporting and comparative statistics to record progress and identify energy and carbon inefficiencies. We should drive the use of standardised data to improve product selection, in-use performance and end of life recycling.

“For the specifier community, a more active collaboration between developers, designers, engineers, contractors, and clients is also required to reduce waste significantly. It’s as much about the work as the materials used, and sometimes this means choosing retrofit over a new build. There’s also an onus on the Government to do more to encourage the retrofit of UK buildings. We’ve seen this recently from the FMB (Federation of Master Builders), who are calling for the financial burden to be removed from residents if we’re to truly deliver greener, cleaner homes.”

Adrian Attwood, Executive Director, conservation construction contractor, DBR Ltd:

It can be tempting to view sustainability solely through an ecological prism, however that’s just one side of it. If we are to truly sustain the UK construction industry, we need to urgently address the looming skills shortage we face.

Over the next year I’d like to see all sides of the industry come together to establish a stronger, home-grown pool of talent as imported labour decreases and the existing workforce continues to age.

That’s not all, if we are going to protect and strengthen our industry in the long-term we need to encourage current practitioners to become the teachers of the future, passing their skills to the next generation. It’s a challenge but one I know the construction industry is more than capable of rising to.

Phil Cox, Director, leading structural materials trade body, Modern Masonry

There’s a lot of noise around sustainable materials and what constitutes a ‘green’ building product. However, many top line stats offered by manufacturers are deceptively superficial. As ever, it’s easier to cherry pick facts to support one’s preferred narrative rather than address inconvenient truths, however minor.

As understanding of the climate crisis grows, my hope is for even greater awareness around real steps manufacturers are taking to decarbonise, without the misleading effect of carbon credits.

Reaching Net Zero targets is something our members, comprising the majority of UK block manufacturers, take very seriously. We hope their collective efforts and transparency will set an example for others to follow, particularly in the aftermath of the upcoming COP26.

Rachel Davis, Director, structural and civil engineering practice, Perega:

Where green specification was once a nice to have, it’s becoming an integral part of the design and build brief for both new build and retrofit.

We’ve already seen evidence of this within healthcare construction, as the NHS continues its accelerated drive towards Net Zero 2050. In this space there’s a heavy emphasis on re-use over replace and we now adopt this approach with materials wherever possible.

However, where new is unavoidable, specifiers are starting to look for products manufactured within a circular model, which can be repurposed beyond their original lifespan or contain a high volume of recycled materials.

There’s plenty of food for thought ahead of COP26, particularly for senior construction industry bodies and policy makers. What’s clear is that a concerted effort is being made across the sector and this needs to be further encouraged.

As we can see the whole issue is far more complex than it superficially appears, and requires a comprehensive set of solutions to address it. Let’s hope the international discussions this Autumn give some clear direction which will help guide built environment professionals further down the path towards Net Zero 2050.

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Annual House Price Index Rises

Latest data from GOV.UK shows that the average UK house price increased by 10.6% over the year from August 2021, which is up from just 8.5% in July.

Due to the impact of COVID-19 on both the number and supply of housing transactions, there could be larger revisions to the published House Price Index (HPI) estimates than usual.

Within the latter half of 2020, the UK saw the average house price growth accelerating. This trend then continued into 2021 as the average house price for August 2021 was £264,000, which was an increase from £257,000 in July 2021.

In England, the average house prices increased over the year to £281,000, £195,000 in Wales, £181,000 in Scotland and £153,000 in Northern Ireland respectively. In contrast to this, London saw the lowest annual growth of 7.5% for the ninth consecutive month.

Paul Stockwell, Chief Commercial Officer at Gatehouse Bank, comments: “Continued home buyer demand saw prices rebound in August after a slump the previous month.

“Buyers will have been driven to capitalise on the final stamp duty savings which were available until the end of September.

“However, it is the desire for homes in locations which were once viewed as not accessible before working from home that continue to push up prices. At the same time, stock levels have yet to bounce back enough to tame much of this demand.

“Home-movers have been largely behind the demand seen over the past year, but they are being joined by growing numbers of first-time buyers and international investors.

“The availability of mortgages requiring smaller deposits mean first-time buyers are returning, while easing of travel restrictions is drawing international investors back.”

Commenting on the latest ONS House Price Index, Stuart Law, CEO of the Assetz group, said: “Today’s data shows a continued upward trend in house price growth. Many industry commentators have been speculating that we’ll see a short-term boost to prices fuelled by further buying over coming months ahead of expectations that interest rates will be raised modestly, followed by a slow down in the market afterwards.”

“We, however, do not believe this short-term surge to be the most likely case. In our view, interest rates will not move enough to impact the market, particularly in the short term, but instead the longer-term increases in demand from post-pandemic changes to housing trends and also our expectation that labour and materials shortages will continue have a significant bearing on housing supply and that will drive up house prices consistently over the next year or two.”

“Given the current shortfall of appropriate housing stock in the UK at present, as well as recent predictions from Savills that the number of houses being built will not return to pre-pandemic levels until 2026 and even then will remain 20% short of Government targets, there is a clear opportunity for SME housebuilders to meet consumer demand with their expert local knowledge and rapid adoption of innovative housebuilding processes. In particular, with the ongoing energy crisis placing greater importance on the energy efficiency of homes than ever before, such businesses are in prime position to deliver much-needed ‘green’ housing through their use of modern methods of construction which are more precise and produce more eco-friendly homes.”

“We’ll be paying close attention to the Chancellor’s Budget next week and hope that improved access to alternative funding for such housebuilders is among the key environment-focused initiatives he is expected to announce given that the banks are pulling back loan support for SMEs at a rate not seen in the last 10 years.”

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New Homes Built on Derelict Land

Thousands of new homes are set to be built on underused and derelict land with the aim of regenerating local areas and helping people onto the property ladder, thanks to a new initiative from the Department of Levelling Up, Housing and Communities (DLUHC).

Around £58 million from the £75 million Brownfield Land Release Fund (BLRF) has been allocated to 53 councils. The new funds will boost local areas by transforming unloved and disused sites into vibrant communities for people to live and work in. This will help to protect the countryside and green spaces while an extra 5,600 homes are built on these sites, supporting young people and families throughout the country into home ownership.

The funding could also support up to 17,000 jobs throughout the housing and construction sector, as well as the wider economy.

Secretary of State for Levelling Up, Michael Gove MP, said: “We are levelling up and backing home ownership in every corner of the country, delivering new high-quality, affordable homes and creating thriving places where people want to live, work and visit.

“Making the most of previously developed land is a Government priority and it will help protect our cherished countryside and green spaces.”

This funding allocation includes £5 million for self and custom build projects, while a further £20 million from the BLRF has also been designated to help accelerate the self and custom build sector. With councils also being able to bid for the remainder of the funding, this gives local people the opportunity to build and design their own homes.

Cabinet Office Minister, Lord Agnew, commented: “This support being provided to local authorities is another clear demonstration of this Government’s commitment to levelling up the country.

“The latest projects to benefit from this support, through Brownfield Land Release funding, will not only help unlock under-used public sector sites for homes but also help deliver jobs and save taxpayers’ money.”

Boosting housing supply is central to the levelling up agenda. Last year 244,000 homes were delivered – the highest number of new homes for over 30 years. The Government aims to build up to 300,000 new homes a year by the mid-2020s to put home ownership within reach for more people across the country, making it a more mainstream, realistic and affordable option.

The Government last year announced the £400 million Brownfield Fund for seven mayoral combined authorities which will also deliver much-needed new homes on brownfield land – unlocking 26,000 high-quality homes.

The £150 million backed Help to Build scheme was announced in April. It will allow access to low-deposit mortgages and improve affordability of home ownership for people who want to build their own homes in a similar way to the Help to Buy scheme.

In addition, the review by Richard Bacon MP, which recommended a major scaling up of the self and custom build sector, has been warmly welcomed by the Government with a response to the findings to be published in due course.

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Funding Given for Transport Revolution

Entrepreneurs and innovators alike that are pioneering new ways to create a better transport system are set to see their ideas being brought to life thanks to new UK Government funding. The announcement was made last week by Transport Minister, Trudy Harrison.

Around 53 projects are set to get a share of £1.95 million in Department for Transport funding. Past winners include a purifying system to lower virus transmission on trains, a portable charger for use at remote locations, and a battery cooling system.

In the last round of funding (2020), the University of Surrey constructed a device which could make it safer for people to travel. This device could be installed on trains and buses to purify the air as well as lowering the transmission rate of certain viruses, including Coronavirus.

Similarly, Greenway Innovations developed a system which attracts and grabs virus droplets produced when people cough. This system has the ability to be installed on trains to purify the air and lower transmission of viruses.

Transport Minister Trudy Harrison said: “Backing innovation is a priority for us and I’m delighted to be supporting Britain’s budding entrepreneurs, as they help us to ensure people can travel at ease and to solve the complex task of decarbonising our transport system.

“This is vital as we look ahead to a greener and safer transport future that will create jobs right across the UK.”

QDot has also created a battery cooling system, thanks to funding it received in the last round of the competition. The design includes a built-in cooling tab that allows heat to be conducted away rapidly, allowing drivers to charge their vehicles quickly by preventing battery packs from getting too hot.

Meanwhile, thanks to Government funding, a portable charging solution that can allow drivers to charge at remote sites, including festivals and tourist attractions, is being developed by Pragmatex. The device can also be used to ‘concentrate’ mains supply where there is little excess power available – charging the battery slowly from constrained supply and then rapidly transferring this stored energy to a vehicle when and where it can charge rapidly.

Now in its 11th round of funding, the Transport Research and Innovation Grant (TRIG) brings together talented start-ups – mainly SMEs and universities – and policymakers at the earliest stages of innovation.

By issuing targeted investments of up to £30,000 for each project, the fund aims to help budding start-ups and academics propel their ideas to market quicker.

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Plans to Decarbonise UK Power System

Plans have been revealed to ensure that homes and businesses in the UK are powered by affordable, clean and secure electricity by 2035.

A new landmark commitment to decarbonise the UK’s electricity system by 2035 was confirmed by Prime Minister Boris Johnson and Business and Energy Secretary Kwasi Kwarteng, to help boost the UK’s net zero ambitions. This will focus on building a secure, home-grown energy sector which reduces reliance on fossil fuels and exposure to volatile global wholesale energy prices.

This brings forward the Government’s commitment to a fully decarbonised power system by 15 years, and also builds on the PM’s 10 Point Plan for a Green Industrial Revolution to secure a future clean electricity supply generated in the UK, for the UK.

To ensure this ambition becomes a reality, the Government will double down on efforts to deploy a new generation of home-grown technologies – from offshore wind, hydrogen and solar, to nuclear, onshore wind and Carbon Capture and Storage.

These green technologies will use the wealth of Britain’s natural resources to deliver cleaner, cheaper power, and create thousands of new high-skilled jobs in new industries across the UK.

Business & Energy Secretary Kwasi Kwarteng said: “Our plan to move to clean energy and a carbon-neutral economy means new kinds of jobs in new kinds of industries. The world needs the innovation and entrepreneurial genius of British companies for this transition to succeed.

“Recent volatile gas prices have also demonstrated how the way to strengthen Britain’s energy security, ensure greater energy independence and protect household energy budgets in the long term is through clean power that is generated in this country for the people of this country.”

While gas generation continues to play a critical role in keeping the UK electricity system secure and stable, the development of clean energy technologies means it will be used less frequently in the future.

To ensure a clean electricity system is reliable, wind and solar power will need to be complemented by other clean technologies, such as nuclear and flexible technologies, that can supply electricity or reduce demand when the output from wind and solar generation is low.

The Government will set out further details on its wider plans to achieve net zero emissions by 2050, through its net zero strategy, which will be published ahead of the UK playing host to the UN COP26 climate summit in Glasgow.

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Pagabo Launches New Construction Qualification

A new cross-industry initiative has developed a brand-new set of qualifications for the construction industry. The qualifications are focused on future-proofing and prepping for the changes that digital transformation is set to bring to the construction sector.

The Future of Construction initiative is being led by Pagabo, a national framework provider, and is made up of representatives from throughout the wider construction industry who have collaborated to help create the future workplace. The group has five key themes and has been working closely to help identify what can be done around training within the industry to help tackle the current skills shortage, as well as future-proofing the sector and its people.

A five-level qualification on The Future of Construction has been developed, which allows an individual to ‘future-proof’ themselves and to help the industry provide an individual with a life of careers within the industry.

The new qualifications were announced as latest data from the Office for National Statistics reveals that vacancies in the construction sector have hit their highest figure for at least 20 years. Around 43,000 construction roles were unfilled between July and the end of September, which is an increase of 7,000 on the figures between June and the end of August.

Charley Wainwright, who was hired in 2020 to lead on The Future of Construction initiative, has been driving this area of work for Pagabo. He said: “We have to make sure that the skills gap we are facing doesn’t get any bigger, and that training is fit for the new practices that digital transformation will bring. This latest data demonstrates that squeeze on skills in the sector further, so it’s more important than ever that we are getting the best talent into the industry – but most crucially that they are trained with the skills the future will need.

“We have been working with our collaborators across the industry to identify not just what that may look like, but to create brand-new qualifications and training programmes that will support new workers and ensure that the existing workforce is able to upskill and reskill where appropriate too.

“Through collaboration with our working groups, made up of representatives from across the whole industry, we have collectively identified a number of key issues when it comes to construction skills. This includes the lack of soft skills training within the industry, a lack of preparation of future skills, a lack of qualifications that are suitable for all levels, and a lack of training that can be delivered digitally.

“However, we haven’t stopped at just identifying the issues. We’ve taken this information forward to work with national awarding body ProQual to develop a set of qualifications that are fit for purpose, fit for the future and will help people promote themselves and their career within construction.”

The qualifications are aimed at all levels, from trainee through to senior management, and are accredited by Ofqual. The study process encompasses a variety of assessment methods and supporting evidence requirements, which can include observation, witness testimonies, activity logs, written questions and professional discussions. The assessment process will be planned and discussed on a continual basis throughout the study period until all of the required evidence is complete, allowing much more flexibility in study than is available in existing qualifications.

The five qualifications have been put through testing with more than 20 volunteers, with all of those reporting that the qualifications will not only be brought into their current job roles but will also allow them to feel equipped for future positions too.

Mr Wainwright added: “The construction sector is a crucial one to the UK economy – shown by the role Government expects it to play in post-COVID recovery. It employs some three million people and has more than 300,000 individual businesses.

“But the workforce of tomorrow wants and expects more than what the industry currently offers, especially post-pandemic, when it comes to things like work-life balance and technology-driven practices. This means it has never been more crucial to ensure that construction is seen not just as a job, but an enticing career option.

“We also haven’t forgotten that the workers of the future are still at school, so our next steps are to develop more qualifications that will be available for schools and colleges. With this approach, we will be able to showcase the huge variety of career options the construction industry holds, capture engaged and enthused students during their studies and bring them into the industry of the future.”

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Negotiating a Comprehensive Break Clause that Reflects your Current Situation

As UK businesses begin to establish a new normal in the post-pandemic era, the commercial real estate landscape is also undergoing its own transformation. Businesses that still practice flexible working are keen to renegotiate existing leases, inserting a break clause into agreements where possible. Karen Mason, partner at specialist real estate law firm, Newmanor Law, offers her advice to those business owners considering this course of action.

The first thing that tenants must keep in mind is that negotiating a new and improved lease is a complex process, and one that cannot be completed overnight. In addition to this, break clauses can be difficult to trigger, especially if they have not been carefully drafted.

That is why, business owners should seek professional support from the outset, as an experienced legal team will help them navigate the process carefully, ensuring they secure the best lease possible.

Uncertainty in the market

According to research from global property experts, CBRE, the downturn in real estate letting appears to be widespread, with office investment in the first quarter of 2021 down 65% on the previous quarter and 37% on the first quarter of 2020.

Whilst the adoption of alternate working patterns started before the pandemic, there is no question that Covid-19 and the resulting lockdowns accelerated the decline in demand for commercial property space.

This is the backdrop against which any consideration of the changing nature of commercial leases takes place, with the slump in overall demand for office space impacting on the kind of clauses tenants and landlords will be negotiating.

Negotiating an effective break clause

This uncertainty caused by the pandemic has led to more tenants utilising existing break clauses, whilst others rush to implement similar clauses in their new leases. Many will be seeking to take advantage of the drop in demand which landlords are experiencing to drive as hard a bargain as possible when negotiating their contracts, and that may include the introduction of a break clause.

As the vast majority of commercial leases run for five to ten years, inserting a break clause into these may offer more flexibility for tenants and landlords as it enables either party to end the lease early so long as certain conditions have been met.

For example, an organisation with a 10-year lease, might seek a clause to be inserted which will give them the option to exit the lease at any point after 4 years as long as six months’ notice is given.

As it stands, there is a lot of uncertainty when it comes to a demand for office space. For this reason, the inclusion of a break clause can be one of the main sticking points during negotiations between tenants and landlords, so it is vital that both parties take the time to understand what it entails.

 

The impact of a break clause

From the leaseholder’s perspective, a break clause will enable them to walk away from an agreement if the commercial space is no longer needed. On the other hand, these clauses will allow landlords to remove tenants, should there be a more profitable alternative on the table. Previously, tenants have been against giving landlords break options, but in the current climate, this could be mutual.

For the party seeking to trigger the clause, the tangible benefits are obvious, but taking this course of action is not without its own complications. The complex nature of the process means that both parties must consider the clause and mechanics for implementation carefully, as any future disagreement could lead to costly legal action.

Remember, the utilisation of a break clause could leave a landlord with the difficult task of having to re-let the property at short notice, so tenants could experience some resistance when looking to trigger a clause.

Common disputes

The Royal Institution of Chartered Surveyors published a ‘Code for leasing business premises, England and Wales’ in February 2020, which states that the break clause should only be conditional on “the tenant paying all basic rent payable on any date before the break date, giving up occupation and leaving no subtenants or other occupiers …”.

It may sound straightforward, but in reality, many landlords insist on going beyond what is only a voluntary code and imposing stricter conditions. In many cases the landlord may attempt to link the triggering of the break clause with the wider covenants of the lease, such as the requirement to return the property in a specific condition, or to undo any alterations carried out during the lease term.

Disputes between landlords and tenants about the exercise of break clauses are very common. It is very easy for a tenant to get the exercise of even a very simple clause wrong. It would be wise, therefore, for any tenant uncertain of their compliance with conditions to employ the services of a specialist real estate lawyer or surveyor to closely work through the break clause and how it is to be exercised.

If the opinion of a specialist is that the conditions of the break clause cannot be met then the tenant might choose, instead, to negotiate a formal ending of the lease on terms which are agreed with the landlord. Taking advice early before exercise is key.

Triggering a break clause

One aspect of a break clause which all parties must consider are the details of how, when, where and to whom the notice is served have to be adhered to precisely. Tenants and landlords need to know that a break clause will be rendered invalid if the precise conditions outlined in the lease are not met. This could include all manner of things from the method used to give notice, down to the person who serves the notice, or who that notice is served on.

The tenant will also need to ensure that rent payments are made up to and including the break date, even if that means paying for a period which falls after any break will have taken place.

Seeking legal advice

One key detail to keep in mind, is that when a break clause has been triggered by a tenant, it cannot be legally revoked, even if both parties express they want to reverse the decision. Therefore, before taking any drastic measures, it is crucial that you assess the situation carefully.

When it comes to drafting a break clause, do not attempt to complete this process on your own, especially if you have no previous experience. Instead, consult a specialist team of real estate lawyers that will help you negotiate a new or revised lease along with a comprehensive clause.

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