Climate change has returned as a high priority in 2019, with Extinction Rebellion and Greta Thunberg grabbing the headlines.
According to a Progress Report produced for Parliament 37% of carbon emissions in the UK come from buildings, and 36% of these come from commercial property or public sector buildings. So what is being done to reduce this?
Energy Performance Certificates became part of the English property scene in 2009. They were added to the ever increasing list of due diligence required when letting or selling a property. In relation to older and second best properties the Short Richardson & Forth commercial property team still sees many sellers regarding them as an inconvenience. They are regularly forgotten and produced hurriedly after Heads of Terms have been issued.
More positively new buildings tend to be built with good energy performance in mind. For example our team has been dealing with a lease in a new development in a London suburb, and energy performance was very important in the specification of the building and the lease contained very tight obligations on the tenant when carrying out its fit out.
The EPC rules were tightened in 2018 when the MEES Regulations meant a landlord could not let a property rated F or below, and these rules get tighter still in 2023 when it will be no longer permissible to continue to let a property rated F or below.
In the coming decade the rules will be tightened some more. The Government is currently consulting on further changes by 2030 to achieve a 20% reduction in business energy use and net zero carbon emissions by 2050.
The consultation is to decide whether buildings should all be rated category B by 1 April 2030, or category C. This will not apply to all buildings and there will be an element of the cost effectiveness of upgrading. Cost effectiveness is based on recovering the cost over seven years. The consultation is also whether these rules should be brought in in one go, or on an incremental basis.
The new legislation, although ten years away, is likely to cost £1.5 billion if the lower target is set and £5 billion if the higher target is set. These are significant figures, but in the context of the UK property market are not prohibitive. There is no doubt this is going to increase building cost, but where that cost is felt most is still to be seen.
The consultation is open and closes on 7 January 2020. You can have your say at www.gov.uk/government/consultations/non-domestic-private-rented-sector-minimum-energy-efficiency-standards-future-trajectory-to-2030.
If you are looking to sell or let your property and have questions on the legal requirements in relation to energy performance of the property, or any other aspects of the process, please do not hesitate to get in touch with a member of the commercial property team at Short Richardson & Forth on either 0191 232 0283 or firstname.lastname@example.org.