Landlords ‘unable to rent energy inefficient commercial buildings’ from 2018

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Landlords ‘unable to rent energy inefficient commercial buildings’ from 2018

Landlords could find they are unable to rent commercial properties in two years time because they fall below the minimum energy efficiency standards, according to research from real estate firm Cushman & Wakefield.

The company suggests that almost 20% of commercial properties currently fall short of the minimum energy efficiency standards required under the Energy Act by April 2018, with EPC ratings of F and G. That means it will be unlawful to rent them from April 2018. A further 19% are rated E. Owners of non-compliant buildings can be liable for fines of up to £150,000.

Philip Webb, head of project management and consultancy at Cushman & Wakefield, said: “These regulatory changes will have a significant impact on landlords’ ability to lease property, with the worst rated buildings unlettable by law. However, owners should also bear in mind that occupiers will increasingly favour higher EPC-rated buildings which will have lower running costs, and help companies prove they have a strong sustainability track record.”

Alan Somerville, the firm’s head of strategic energy and sustainability, added: “Investors need to act now. Although 2018 may seem some way off, given the time needed to identify where building efficiency upgrades are needed and to ensure the work is completed, delaying this process could prove very costly.

“It is possible for building owners to declare themselves exempt from the regulations in certain circumstances, however, they must sign up on a register which will be open from October 2016.”

The warnings come as government data suggest as few as 13% of companies have a quantitative target to reduce energy use or benchmark how much they are using.

Data released by the Environment Agency also suggests that energy issues remain some way off the agenda at board level. Of the firms mandated to carry out energy audits and have them signed off by a company director, only a quarter said the findings – which point out where energy can be saved – had been actively discussed by directors.