Warning over strict new energy efficiency legislation

Nick Coultish.

HUNDREDS of commercial buildings, including shops, offices and industrial units in the Humber region risk falling foul of strict new energy efficiency legislation which comes into force next year, warns a commercial property specialist.

From next April owners who have buildings with an Energy Performance Certificate (EPC) rating of ‘F’ or ‘G’ will not be able to let them.  Landlords who already have tenants in buildings with these low ratings will have a stay of execution until April 2023 by which date the ratings must have been improved.

Nick Coultish of Scotts Property LLP is urging those who own or occupy commercial premises to be aware of the new Minimum Energy Efficiency Standards (MEES) which will become effective from April 2018.  Commercial premises are already required to have Energy Performance Certificates (EPCs) which rate the efficiency of buildings on a sliding scale.

Whilst there are some exceptions, it is anticipated that around 20 per cent or one-in-five commercial properties in the UK will fall within the ‘sub-standard’ category, falling foul of the new regulations, according to the Royal Institution of Chartered Surveyors (RICS).

“This is an issue that must be highlighted as we move into the first half of 2018, there is no doubt that action is needed now within the commercial property sector to ensure that steps are being taken to bring the energy efficiency of buildings up to standard,” said Mr Coultish.

“The government is certainly taking the new legislation extremely seriously proposing fines of between £5,000 and £150,000 per breach, based on the rateable value of the property if a new letting takes place on a property with a rating of ‘F’ or ‘G’ from April 2018, or where improvements are not made on premises with an ‘F’ or ‘G’ rating which continue to be let after April 2023,” he added.

“While the new regulations will be seen as a real headache by some landlords, they cannot be ignored as failure to act may render certain premises unlettable.  However a simple review of the property can often reveal relatively simple compliance steps. Continually looking for ways in which to make any business premises more efficient is sensible and reflects good practice.  The outcome of a review may not be as complex or as expensive as many think,” advised Mr Coultish.

The changes are coming into force as a result of the Climate Change Act 2008.  Independent of EU legislation, the UK is committed to reducing its emissions by at least 80 per cent by 2050, compared to 1990 levels. 

It is estimated by the RICS that the property sector accounts for 32 per cent of the UK’s emissions and that more than 80 per cent of the buildings that exist today will still be in use in 2050.  In order to meet long term targets, it is seen as essential to reduce demand by improving the energy performance of such buildings.

The new standards build upon existing legislation dating back to 2012 which made it a legal requirement for premises to be let or sold to hold an Energy Performance Certificate.  Alongside the certificate, the Assessor will have provided a recommendations report with suggestions to improve the rating. 

“Quite often implementation of these recommendations (some of low cost) can help to improve the rating of the premises.  This may include changes to lighting, heating and insulation within the premises. This, in turn, may result in lower running costs and greenhouse gas emissions, providing good news in respect of reduced tenant out-goings and a reduced carbon footprint,” added Mr Coultish.