subject to a cap of £150k, can be imposed for breaches.
What’s more, organisations occupying these “unfit” spaces will also be affected, as business owners will be paying an unnecessary amount for their energy usage.
THE FUTURE 2018 may seem like a long way off.
However, with the dawn of 2017 firmly on the horizon, both landlords and business owners will have to consider how this regulation may affect their New Year’s budget and subsequent planning.
As per the government’s Energy Performance of Buildings (EPB) statistics release in Q1 2016, 18% of non-domestic buildings in England and Wales achieved a F or G rating; meaning around 216,000 privately rented properties do not currently conform to the regulations. Although some may have until 2023 to make the necessary changes, approximately 50,000 will have to get their act together next year if they’re to comply with the terms set out in the Directive from April 2018.
Given that there is a lead-time to raise the EPC rating, it is reasonable to assume that there will be a significant increase in interest in energy efficiency upgrades in 2017 and thereafter as more leases come up for renewal
WHY IS THIS BEING DONE? Encouraging businesses to
improve the energy efficiency of non-domestic property has always been firmly on the political agenda and, despite Brexit, this isn’t looking likely to change.
According to the Carbon Trust, the energy use for non-domestic buildings accounts for circa 18% of the UK’s CO2
efficiency of these buildings will, therefore, help the UK meet its targets concerning climate change and energy consumption. Adhering to the recommendations can reduce costs all year round.
As per the Carbon Trust, typically, 20% of a business' annual energy costs are wasted through the use of energy inefficient equipment. This
is consistent with our findings on many sites. Instead of seeing this as yet another regulation set to disturb the waters, we would encourage landlords and business owners to embrace it as a cost (as well as planet) saving opportunity.
AREN’T THE NON- DOMESTIC PRIVATE RENTED SECTOR
ALREADY COVERED? The 2011 Energy Act recognised the need for an impetus to act on energy efficiency, especially for the very worst performing buildings. This overarching need formed the foundation for the regulations. Prior to this, other policies covered the non-domestic private rented sector to a certain extent, but MEES is unique in the fact that it covers the entire non-domestic building stock. It’s the only regulation out there that is actively incentivising improvements in energy efficiency across the whole non-domestic realm.
“20% of a business' annual energy costs are wasted
through the use of energy inefficient equipment.”
Despite new builds contributing to the portfolio, experts predict that 60% of today’s non-domestic buildings will still be around in 2050. These existing properties will take up a good chunk of floorspace (around 40-45%, in fact) so it’s important to upgrade these buildings with energy efficient measures in order to tackle overall usage.
HOW CAN LANDLORDS AND TENANTS WORK
TOGETHER? The DECC’s consultation included a high level of involvement and engagement with stakeholders, including leading landlord, tenant, environmental and property professional representative organisations to ensure that provisions were in place to support
landlords and occupiers. Part of their discussions involved assessing how the two parties could work together in order to make the transition from ≤F to ≥E. In most cases, it will be the landlord’s responsibility to organise and pay for the building upgrades so they can re-let the leases when the time comes. However, this will obviously require an element of cooperation from the tenant in question. There could be an element of tension between landlord and occupier if conversations don’t take place well in advance of the planned changes so we would encourage businesses and proprietors to engage with one another in order to pre-empt and avoid any potential issues. It’s important to remember that the cost savings associated with becoming more energy compliant will be passed onto the occupier.
THE BENEFITS The tens of thousands of properties
currently listed as grade F or below are wasting energy – it’s as simple as that. This is an unnecessary cost on business, not to mention the wider economy, and a contributing factor to the country’s greenhouse gas emissions.
If businesses buy into implementing further energy efficiency measures, there will be a positive knock-on effect for the industry at large. With the demand for new and innovative energy saving systems, there will no doubt be a need to fill more jobs in the green construction sector. This will support the general growth of the industry, in addition to widening and strengthening the supply chain. Greater competition within these markets may also spur innovation, which can reduce the end costs of installing measures to save money - regardless of the property portfolio.
WHAT’S NEXT? As with any progressive society, it
doesn’t end there. There may be plans to increase the regulatory standards further at some stage. However, if that becomes the case, every step will be taken to ensure that businesses make better decisions when it comes to implementing improvements that will benefit us all.
INDUSTRY INSIGHT | 35
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