Property sector prepares for energy efficiency changes

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Property owners and occupiers are being urged to act now to protect their businesses and investments from potentially costly changes in energy efficiency legislation.
Dale Gooderham of Garness Jones

Property owners and occupiers are being urged to act now to protect their businesses and investments from potentially costly changes in energy efficiency legislation.

Dale Gooderham, Senior Agency Surveyor at Garness Jones, said most clients are ahead of the changes which will take effect next month and have ensured their properties meet the new standards.

But he warned that those who leave it too late could find themselves unable to rent the premises and will also face difficulties with using property to secure finance. Penalties can also be imposed for a failure to achieve the required ratings.

He said:

From 1 April it will become unlawful to let commercial properties that have an Energy Performance Certificate (EPC) rating of F or G. That could affect 18 per cent of commercial property stock. You will not be able to market it without improving it.

Landlords will be the parties most affected. The most obvious threat is the cost of upgrading buildings, but there is also the cost of not being able to collect rent from them.

Penalties are 10 per cent of rateable value with a minimum £5,000 and a maximum £50,000, increasing after three months of non-compliance to 20 per cent, with a minimum £10,000 and maximum £150,000.

Garness Jones highlighted the EPC changes when the firm presented a property industry briefing in 2017, and since then Dale has been leading a drive to raise awareness.

He said:

We have been having conversations about this with property owners and occupiers and with other parties such as lenders. People do seem to be preparing effectively for the new regulations and we welcome that because the changes will not go away.

There is a high level of awareness. For example, solicitors are being asked by prospective lenders to report if a property has a rating higher than E simply because a lot of lending is based on rental prices. If you can’t rent a property because it’s not the right standard you have a problem.

We haven’t heard of any retentions yet but we have had cases where the EPC has had to be improved before the property could be offered. That means spending a bit of money up front but that investment is essential if you are to avoid the bigger costs which can result from not being able to rent the property because it is not up to the standard.