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Almost 20% of Commercial Buildings fail to meet new Government Energy Standards

Written by: John Padgett on Friday 26/02/2016

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Almost a fifth of all the commercial property owners in the UK will be required to make improvements to their buildings to comply with new government energy standards. Failure to comply will see property owners run the risk of being barred from letting their properties.

The Energy Act was passed in the last Parliament and it includes rules that come into play in 2018. These new rules state that it will be unlawful to rent out a business property which does not meet the minimum energy efficiency standard. This minimum standard is an “E” rating with “A” being the highest possible efficiency rating.

The research was carried out by a national property agency and it found that nearly 20% of all commercial property currently has a rating of “F” or “G” which means they will have to make an improvement before 2018 to avoid penalties and the risk of no longer being able to rent out their property. Another 19% of properties are currently rated “E” according to the research which sees them teetering on the brink of compliance. The research categorised nearly 40% of all properties as potentially running into a performance risk if changes aren’t made before 2018.

From 2018, buildings that do not meet the minimum Grade “E” standard will be classified as ‘substandard’ which will affect the value of the property and also place owners in the firing line of penalties up to £150,000 if they do not comply.

The current guidelines require landlords renting out commercial property over 50 sq. m in size to have a government-approved energy performance certificate but they do not need to meet a specific Grade “E” standard and there is no obligation to carry out improvement works. It is very likely both landlords and property owners will be concerned about the level of change they need to make and the costs involved to comply with the legislation which comes into effect in just over two years time.

“Owners should 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," said Phillip Webb; a property consultancy expert who helped commission this research.

Offering an attractive prospect to potential tenants means ticking every box and from 2018 this includes meeting the minimum energy efficiency standard.

The current guidelines require landlords renting out commercial property over 50 sq. m in size to have a government-approved energy performance certificate but they do not need to meet a specific Grade “E” standard and there is no obligation to carry out

Written by: John Padgett on Friday 26/02/2016

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About the author

John joined Eddisons in 1980 and as Head of Function for Agency, he manages business activities throughout the North of England. He is actively involved in the regional markets with owner-occupiers and property companies and developers. His development of close links to local communities over a sustained period has provided and maintained a constant source of instructions from professionals and business alike.

Significant project experience over three decades of service includes sales of 400,000 sq ft of industrial units on the Euroway Estate in Bradford to a number of logistics and manufacturing firms in a £13.5m deal. Further sales highlights include a 250,000 sq ft mill complex on behalf of receivers, and co-ordination for a recent project involving £10m of student block investment disposals.

John’s approachable and willing nature also ensures highly efficient client liaison and he acts on behalf of some of Eddisons’ major clients, including PPG Ltd, ISG plc, major banks and IPs to name just a few.

A passionate life-long supporter of his beloved Bradford City Football Club, John is happy to provide the benefit of his extensive knowledge, experience and contacts when discussing all things Valley Parade.

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