Energy Act changes, just around the corner!
Whoever said “ignorance is bliss” will have a lot to answer to in April 2016.
I am amazed, no sorry wrong word, worried about the lack of awareness in the commercial property world of the implications of the Energy Act. From April 2018 it will be unlawful to rent out business property which has an EPC rating less than an `E`. Therefore any property within `F` and `G` will be regarded as sub-standard and will not be able to let until upgraded. The implications could be expensive, requiring work to bring the building to standard to comply and the capital value affected significantly too. There will no doubt be further additional expenses and rent voids created (which could also incur say liabilities to Business Rates). Whichever way, the effects cannot be avoided by landlords and non-compliance with the regulations landlords risk fines, based on the rateable value of the building of up to a maximum of £150,000. Whichever way, significant money is at stake!
However, I am amazed by the general lack of awareness of this, by both commercial property owners and also potential buyers. It is said that up to 20% of commercial property may fall within the F and G ratings, and will need improving.
Some property could be rendered unlettable and the cost of work doesn’t directly correlate to value. Keep reading! It doesn’t stop there, with the regulations planned to be tightened yet further on 1 April 2020 to cover existing residential leases and then in 2023 to encompass existing commercial leases.
It may be possible for some 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.
As part of your property management it is important to keep EPC issues under review and to consider the potential impact on property value of any future government initiatives and take action now, don`t delay!