With Minimum Energy Efficiency Standards (MEES) now in place set for 2018, these regulations will make it unlawful to let non-domestic property with a 'Sub-Standard' EPC rating of F or G. However, there are various exemptions that apply. An example of this is if a letting is less than six months or more than 99 years. This new policy applies to all commercial property's that either require an EPC or already have one. Furthermore, from 2016, all tenants who ask for their landlords consent to improve energy efficiency, cannot be refused.
What does this mean for landlords?
Although 2018 may seem far away, the new regulations already hold the potential to impact landlords substantially. The newly introduced MEES may affect the value of properties, requiring careful consideration by sellers, buyers and funders at an early stage for all current and future transactions.
If sellers don't comply to the new standards by 2018, they may face the challenge of "Price Chipping" from buyers, who may demand a reduction in the price of a property, in order to account for the absence of a safe Energy Performance rating. This reduction in price will most likely exceed the cost that would apply if an investment was made into getting a property to the satisfactory level of compliance. Not only this, but buyers may also negotiate further due to the capital expenditure that would be required to improve the rating beyond the minimum rating, in anticipation of the industry threshold rising in future years.
Another consideration is timing. Energy Performance ratings may differ from initial publication even if there has been no amendments made to the property. Therefore, it would be advised for commercial property sellers to update their already existing EPC's in time for 2018, to avoid problems arising from transaction timing.
The main impact from these regulations, will occur to those who don't prepare in time.
The questions to be asked are as follows:
Does the property need an EPC, or is the existing EPC up to date?
If the existing EPC has a minimum rating already, is this reliable? Was a trustworthy assessor acquired to do the job?
Will required actions be financially accessible?
It has been advised that all commercial property sellers should consider Energy Audits and furthermore, implementing 'MEES' strategies now, to reduce issues occurring at a later date.
Compliance365 is an independent energy consultancy. We provide advice and guidance on all our services; how to save energy; how to save money on your energy bills; and ultimately how to become more energy efficient. Our aim is to be as cost effective and flexible as possible for our clients.
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