Businesses whose leases are up for renewal are being advised to check the energy performance rating before signing on the dotted line.
With new Energy Performance Certificates (EPC’s) due to come into force in April 2018, as currently proposed the changes will mean that after this date it will become unlawful for any commercial property to be either sold or let where it has an EPC rating of below band E.
This means for example that anybody looking to sign a new lease agreement now which runs beyond this date, may be able to use the new legislation as a bargaining chip in their negotiations with the landlord.
Conversely savvy landlords who are already ahead of the game and have better rated properties will be able to attract those wavering about whether to stay put or move on.
Paul Williams, head of agency at the Bristol office of Bruton Knowles is now advising both tenants and property owners to get in touch in order to strike the best deal while ensuring any property complies with the required energy efficiency rating.
Paul said: “Some businesses will be looking to sign new agreements taking them forward to 2018 and beyond. Although this date might seem a long way off it’s surprising how quickly it will come round.
“Being proactive now will help landlords reap the benefits later on and will make any property more attractive to tenants.
“Those concerned about their portfolio will need to assess now the costs and benefits of improving the energy efficiency.
The new rules come into effect from 1 April 2018, after which it will no longer be lawful to let buildings with an EPC rating of F or G, (the two lowest bands). With around 20 per cent of commercial buildings already falling within these categories Williams is concerned that the sector is facing a major challenge.
“Whilst the measures only come into force when a property is either sold or leased, failing to act now on poorly performing buildings could be a mistake unless you’re happy to have a portfolio of void properties on your hands as tenants either vote with their feet or decide to opt for cleaner, greener and cheaper options which will be available to them!”
“The best time to undertake any energy efficiency improvements could be during current void periods or lease breaks, and often there are simple, low-cost measures which can be implemented, which can still have a significant impact on the energy rating of a building.
“For tenants, the forthcoming changes may mean that they can potentially drive down their rent or threaten to move on if the required improvements aren’t made.
“We’ve already had clients contact us, both landlords and tenants, to discuss the implications of the EPCs. Although awareness amongst occupiers is still low, this will rise over the next year as the potential impact of the legislation is recognised, and taking appropriate professional advice at an early stage is likely to result in improved future returns for landlords.”
