Director of Market Development, Assurity Consulting
5th September 2019
From April 2018, any building with an EPC rating (Energy Performance Certificate) with a less than a minimum rating of E may not have existing or new tenancies renewed or granted respectively. From April 2023 MEES will apply to all existing commercial leases.
Government estimates, prior to introduction, indicated approximately 18% of EPC for commercial properties were rated F or G - in terms of numbers of buildings it could represent between 200,000 and 300,000. Fines for failure to comply, depending on the length of time, are calculated on 10% of the property’s rateable value to a maximum of £50,000 (if less than three months) and 20% of the property, capped at £150,000 if more than 3 months.
At its heart, the regulations provide a necessary focus, but over one year on from implementation what are the outcomes so far?
Anecdotal information for both the public and private sector suggests transactions are still occurring for properties in breach of the requirements. Despite this, there appears to be little in the way of enforcement action from the relevant local authorities.
Catching up on my in-tray following my holiday, the 16th August copy of Property Week had also looked at this as an issue. The “lack of general resources for trading standards” and “establishing that a landlord has breached the new rules are not straightforward” were two reasons cited. But further comment also indicated while the “threat of reputational damage” was a motivator for bigger landlords to invest in energy efficiency improvements, for others the incentives to do anything more than the “minimum required to comply” is not there.
In a progress report to Parliament “Reducing UK emissions” published in June 2018 by the Committee on Climate Change (CCC), they highlight that in the UK our greenhouse gas emissions have reduced by 43% - compared to 1990 levels. Closer examination of the figures, however, show that the lion’s share of this reduction has been achieved by power, while our transport, industry and buildings reductions year on year have been relatively “flat”.
With buildings accounting for 66% of electricity consumption and direct greenhouse gas emissions of around 85 MtCO2e (2017 figure), our sector does have a significant contribution to make in combatting climate change. One of the 2019 milestones for buildings in the CCC report was to “strengthen compliance and enforcement framework so that it is outcomes-based, places risk with those able to control it, provides transparent information and a clear audit trail, with effective oversight and sanctions”, so who is going to take the lead?