Energy legislation to affect value of up to 40% of UK commercial property – DTZ
DTZ says more than 40% of UK commercial property could fail the new government energy standards encompassed in the Energy Act, which passed through Parliament last year. The new standards could have a significant impact on the value of these properties, the firm warns.
The new Act proposes new requirements for the sale or lease of commercial property, in addition to those included in the legislation relating to Energy Performance Certificates (EPCs). All commercial property for sale or to rent of more than 50 sq m currently needs an EPC, but the new Act goes further and sets a minimum standard of energy efficiency – if your commercial property does not meet this requirement, it will be illegal from April 2018 to sell or rent out these premises.
It is expected that the new minimum standard will be an EPC rating of E or above. So commercial properties that are not up to this level, or that are on the borderline, “could suffer a significant drop in overall value unless they take approved measures to improve energy efficiency,” DTZ notes.
DTZ, now part of UGL Services, notes that there is currently no legal obligation for landlords to carry out any improvements to energy efficiency. The firm says it has carried out more than 1,000 EPC audits during the past year and has found that around 40% would be on the borderline E rating or below.
Head of sustainability at DTZ, Paul Brown, says that once the finalised proposals are launched, we can expect to see discounts factored into property acquisitions in order to cover the improvements needed to make buildings sufficiently energy-efficient to meet the new standards. “Some landlords may view 2018 as too distant to start worrying now, but many improvements will need to be factored into asset plans and the nearer we get to 2018 the greater the demand and the more expensive it will be to implement changes,” he adds.
DTZ also notes another change in the recent legislation on this subject – from April this year, EPCs need to be prepared before a property can be marketed for sale or to let, rather than on the completion of a transaction. “Agents now share responsibility with property owners for ensuring that EPCs are conducted in a timely manner,” the firm points out.
Lambert Smith Hampton issued its own warning about this matter in December, which you can read on our blog here.
