CBRE’s Manchester Engineering Services team has reported a surge in Energy Performance Certificate (EPC) risk reviews, as the sector begins a twelve-month countdown before the change in EPC legislation.
In April 2018, the minimum energy efficiency standard (MEES) legislation in England and Wales will require all properties to achieve a minimum EPC rating of E before a lease event can take place. An EPC rating of ‘poor’ (F or G) will fail the requirements for a lease transaction and the properties concerned could become impossible to market unless upgraded to meet the minimum standards. This may lead to valuations, rent reviews and dilapidation assessments becoming negatively affected, with a significant reduction in the property value.
Letting a property that is non-compliant after April 2018 may lead to fines ranging from 10-20 per cent of the business rates being applied.
Daniel Clarke, CBRE’s Senior Director of Engineering Services, said: “Clients are becoming increasingly aware of the April 2018 deadline and how this EPC requirement could impact on their portfolio. Landlords are keen to ensure works are realised and acted upon before lease expiry and lenders are asking questions over the cost liability. Up to 20% of all leases are likely to be impacted on average. We are advising all our clients to plan for the new legislation well in advance.”
CBRE experts are already providing strategic advice to develop improvement plans, or identify where exceptions may apply. The designated sustainable engineers within the team are closely collaborating with their lease consultancy and investment return advisors to establish risk profiles, develop comprehensive risk reviews and deliver improvement plans to ensure clients meet all the new EPC ratings requirements.
