This Act marks a significant tightening to current legislation. At present, all commercial properties over 50 sq m require an EPC when sold or rented, although there is no legal obligation for landlords to carry out any efficiency improvements. The assessement of properties includes the efficiency of tenant fit out so as a landlord improvement can be challenging.
What does this mean for landlords?
Any building that fails to meet this requirement will be classed as “sub standard” and is likely to suffer a significant ‘value at risk’, unless measures are taken to improve and upgrade its energy efficiency.
In addition to impacting investment value, these regulatory changes will also have a significant impact on landlords’ ability to lease property, with those buildings classed as sub standard unlettable by law. Owners should also bear in mind that occupiers will increasingly favour higher EPC-rated buildings which should have lower running costs and greater cost efficiency.
What should landlords be doing?
Landlords need to act now 2018 may seem some way off, given the time needed to identify where building efficiency upgrades are needed, and formulate the strategy to install them, delaying this process could prove very costly.
1. Understand your risk
Undertake full portfolio review to identify where your real risk lies. Buildings will fall into one of three categories: unaffected, uncategorized or non compliant. For unaffected buildings there is no further action. The issue lies with uncategorised or non compliant buildings.
2. Take action
All uncategorized buildings will require EPCs. For non compliant buildings, landlords have two options – make improvements to ensure buildings exceed the minimum energy efficiency standard or review possibilities for exemption. It is possible for buildings to declare themselves exempt from the regulations in certain circumstances ,however, they must register on an exemption register which will be open from October 2016.
How can Cushman & Wakefield help?
Our Energy & Sustainability team will conduct a full review of your portfolio to identify the areas of risk. We will advise on the options to improve the energy rating of your portfolio and conduct cost analysis to identify the most cost effective route to ensure that your portfolio is fully compliant with MEES.
Energy, Infrastructure & Sustainability
With over 70 advisers operating across the globe, Cushman & Wakefield’s EIS team are able to offer a truly global service to our clients. Our service line covers every aspect of the energy, infrastructure and sustainability lifecycle from procurement through to energy efficiency, viability and asset management with a strong analytical approach to risk management and financial performance.
For further information please contact:
Alan Somerville, BSc MRICSEIS - Energy Factsheet
Director, Head of Energy, Infrastructure & Sustainbility EMEA
T: +44 (0) 131 222 4540
M: +44 (0) 7712 301969