Commercial landlords need to get ahead on energy standards

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October 20, 2016

Minimum Energy Efficiency Standard (MEES) for commercial property will come into effect from April 1, 2018, and it will not be possible to grant a new lease to a new tenant or renew a lease with an existing tenant unless the Energy Performance Certificate (EPC) has a minimum rating of E. This standard will apply for existing leases from 2023 and a significant proportion of the building stock will be affected by these regulations.Landlords need to be reviewing their asset schedules to identify the properties with an EPC rating of F&G. Once these properties have been identified a re-run of the EPC should be undertaken as the existing EPC may not take into account any improvements made to the property or default values and inappropriate assumptions were made in the original assessment and modelling process.Potentially re-running the EPC process could bring the property up to an E rating, without having to invest significant capital expenditure. Early identification of measures which will achieve the minimum E rating and the determination of the nature of works to be undertaken and a programme of works is vital as this will allow capital expenditure to be managed accordingly.Appropriate periods for undertaking the works needs to be considered, such as during periods of planned refurbishment and maintenance, though lease clauses should be reviewed around landlord's access for undertaking works if the tenant is still in situ. .text-links-grid .videoCube { height: 4.7em; } .text-links-grid .trc_rbox_header_span, .trc_spotlight_widget .trc_rbox_header_span { font-family: 'verb_regularbold',Arial,sans-serif; font-size: 18px; margin-left: 10px; } .text-links-grid { margin-top: 20px; width: 100%; } There is still time to make improvements to obtain the minimum rating but if landlords do not review the EPC ratings and start to make improvements, they will not be able to lease their property – unless they have applied for an exemption – which will affect their rental income and value of their property.By undertaking works and improving the energy rating there is the additional benefits of reduced energy use and operating costs, which may be attractive to potential tenants. Moving forward there is currently no agreed industry standard regarding the legislation and landlord, tenants and prospective tenants will need to carefully consider implications of MEES and the impact it may have on future leases.Article taken from The herald on October 20th 2016