With forthcoming policy changes potentially making it unlawful to let properties without the right energy efficiency standards, property firm CBRE is urging landlords in the region to act now to protect their property interests.
Provisions in the new Energy Act are likely to include for powers from April 2018 which will make it unlawful to let a property that doesn’t reach a minimum energy efficiency standard. The intention is for this to be set at an EPC rating of E, therefore any F or G rated assets are now potentially at risk.
Data produced by the Department of Energy & Climate Change estimates that around 18% of commercial property currently falls below the minimum standard, equating to around 600,000 assets across the UK. The impact of this is starting to be considered by valuation teams and investors. However, CBRE highlights that not all existing ratings may be accurate which could already be affecting the perceived value of a property.
Senior Director of Building Consultancy at CBRE Leeds, Richard Bamford, explains; “The key point for landlords is to ensure that their current EPC rating is accurate. A growing number of ratings are being reviewed and indications are that a significant percentage do not accurately represent the asset. Improvements in asset rating of between 20-30% are being seen following a comprehensive review and this can make a difference between gradings and ultimately the legal position should the proposed changes to the Energy Act come into force.
“Many properties that currently fall in the F or G categories and are perceived as carrying risk, actually comply but are being misrepresented. While the implementation date is set at April 2018, this perceived risk could in the short to medium term lead to price chipping or deals falling through so accurate assessment is essential.”
Bamford explains that those with accurate ratings of below E can act now to implement measures to improve their ratings before the April 2018 date. He continues; “If accurate ratings show that a property does not meet a minimum energy efficiency standard, landlords who act now still have time to implement measures to improve their rating and thus ensure the long-term security of their asset.”
