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Commercial Property - Landlords Need to Prepare

Oct 27, 2016

Commercial Property - Landlords Need to Prepare

Back in 2011, the Energy Act imposed a duty on the Secretary of State to levy minimum energy efficiency standards by 2018. The aim is to make it unlawful to let buildings that are energy inefficient.

The MEES Regulations 2015 confirmed that properties having an EPC rating of F or G are regarded as sub-standard.  Currently, it is believed that about 18% of commercial properties nationwide are at this level. 

Subject to exceptions, it becomes unlawful to let these buildings after the operative date for compliance of 1 April 2018.  Exceptions include Listed Buildings status and any improvements that would devalue the property.

With that in mind, there are a number of landlords across the country that need to prepare before this legislation comes into effect.

Take Action

Barker Storey Matthews’ Director, Richard Adam, commented “We are advising landlords to take increasing note of these regulations which will cause issues in letting and selling commercial properties, particularly older units with poor energy efficiency ratings.

"EPCs usually carry recommendations with regard to suggested improvements, which, in some cases, may be a relatively cost-effective way of improving the rating.”

How does this affect older properties?

A particular concern is the volume of older style industrial units and warehouse buildings which often have an F or G rating. 

Steve Hawkins of Barker Storey Matthews, Peterborough office, comments ”Landlords really need to get hold of the situation sooner rather than later.  It may be the case that leases extend beyond the deadline date, but the problem will not go away.

"It is more than likely that tenant responsibility under a lease will not extend to energy improvements, so landlords need to account for this work – and the associated costs - when the building is vacated and put back on the market to let or sell. 

"At first, it may seem a rather daunting task, but I have seen one example where a simple solution of installing de-stratification fans in a warehouse building in Peterborough significantly improved the energy rating.”

Improve Energy Efficiency

Other relatively low-cost solutions to improving office buildings include replacing light fittings with LED units.  The price of these fittings has come down drastically in the last few years, making this a feasible solution for many landlords. 

Hawkins added “Part of a refurbishment in one Peterborough office building involved an ingoing tenant requesting LED fittings as an extra fit out. The cost of the fittings over the standard price was covered within 18 months of running the building. It goes without saying that if the cost of the fittings has now come down to match the standard lighting, it makes sense to improve the energy rating of the building as well as reducing the running costs.”

Other energy improvement solutions for industrial buildings include overlaying and insulation of roofs and replacing heating systems.  Older buildings may benefit from replacement windows, too. However, larger projects may need more project management and cost control skills in order to achieve energy efficiency by the April 2018 deadline. 

The Barker Storey Matthews Building Surveying department (based in Peterborough) can provide comprehensive advice and an initial consultation prior to any formal commitment. 

Contact David Park or Ian Beesley on 01733 233445 today. 

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