IVBN: Sustainability, between ambition and reality
Making homes more sustainable is widely supported, but in practice progress is not picking up fast enough. The ambitions are high, but implementation is complex. This tension affects investment, affordability and the pace of the energy transition in the Netherlands.
By Judith Norbart, Director, IVBN
Over the past decade, the sustainability of housing has shifted from ambition to implementation. Institutional investors are actively investing in the improvement of existing homes, with a view to reducing CO₂ emissions, lowering energy costs and creating future-proof portfolios. This is not a one-off exercise, but is being carried out through multi-year roadmaps and with a long-term investment horizon. The tangible and intangible added value of sustainable buildings is clear and is becoming increasingly apparent in the current geopolitical context. At the same time, these investments must be implemented in a practical context characterised by complex regulations, implementation and decision-making. Precisely at a time when sustainability efforts need to accelerate, it is crucial that the framework conditions keep pace with ambitions. Not holding things back, but supporting them.
Investment requires predictability
For institutional investors, sustainability is inextricably linked to predictability and returns. Investments in energy performance, installations and building quality require significant capital outlay and have long payback periods. This demands a stable and coherent policy framework in which sustainability requirements, rental policy and taxation are aligned. It is precisely on this point that uncertainty is growing. Local, national and European requirements are proving to be constantly changing. This makes it difficult to plan investments responsibly over several years and puts pressure not on the willingness but on the feasibility of the sustainability agenda.
In addition, landlords are increasingly faced with implementation bottlenecks that lie outside their own organisations. Construction and maintenance costs have risen sharply. Procedures take a long time and there are shortages of installers and materials. Grid congestion also poses a growing obstacle to electrification, charging infrastructure and the roll-out of heat pumps. These factors cause delays, higher costs and uncertainty, with grid congestion in some cases making sustainability measures temporarily impossible. Consequently, fewer homes can be improved with the same available capital.
Where implementation stalls
Another bottleneck lies in the organisation of sustainability measures. Current consent requirements for rental properties and decision-making requirements within owners’ associations are blocking projects that enjoy broad support in substance. In the case of rental properties, tenants who do not respond count as a ‘no’ vote; in owners’ associations, high majority requirements present a similar barrier. As a result, necessary home improvements can be delayed or come to a complete standstill. This is at odds with the social objectives of sustainability: lower energy bills, greater comfort and future-proof homes. The path to Paris Proof requires all parties to take responsibility: landlords who continue to invest, and tenants and owners who go along with the changes. They must not hold each other back, but help each other move forward. The government’s role is to remove obstacles, simplify decision-making and support collaboration.
When policy and implementation clash
Accelerating sustainability demands something of us all. Not only because of regulations, but also because of the public interest. It is troubling that this task is becoming increasingly difficult. The tension is paralysing: not because parties are unwilling, but because it is becoming too complex, financially unfeasible and the risks are harder to manage. The solution does not lie in scaling back ambitions, but in improving the framework conditions: collaboration and stable, coherent policy, with sufficient predictability for long-term investments. Only when ambitions can be translated into workable and investable frameworks can the pace be stepped up without compromising other objectives. That is where the opportunity lies to narrow the gap between ambition and reality.
Read the full article in Financial Investigator magazine