New research suggests that commercial buildings with a compliant EPC rating may still fall foul of new energy efficiency regulations taking effect on 1 April 2018.
Almost one fifth of UK commercial properties are at risk of breaching approaching Minimum Energy Efficiency Standards (MEES) legislation which comes into force this April.
Under the new MEES regulations, properties with an Energy Performance Certificate (EPC) rating below an 'E' cannot be rented out to new tenants or have existing tenancy contracts renewed. However, a new study by real estate software provider Arbnco suggests even buildings with a compliant 'E' rating may actually still be in breach of the laws.
Arbnco recently simulated new EPC ratings for more than 3,600 buildings, discovering that energy efficiency standards in 17.7% of these commercial properties had dropped into a lower banding on re-assessment, with 15% of the properties now rated ‘F’ or ‘G’ – deeming them ‘sub-standard’.
Startlingly, more than one in ten (11%) of ‘E’ ratings dropped to the lower bands within 12 months of assessment, demonstrating that there are potentially thousands of property owners with commercial buildings that could breach the new guidelines without knowing it.
Commercial landlords that fail to comply with MEES could face fines of up to £150,000.
Could my commercial property be at risk due to MEES?
Though EPC ratings must be replaced every 10 years, the government-approved software tool for calculating them - known as SBEM - is updated far more frequently in line with building regulations.
This means that if your commercial property has received an EPC rating of ‘E’ within the last decade – and particularly if it is due for renewal soon – then it is likely not to make the grade if energy efficiency improvements haven’t since been implemented.
A scheduled EPC renewal is not the only potential snag. If you are required to retrofit your property due to a change of tenant, or are looking to sell, a new EPC will also be needed, posing further risk of being downgraded if energy efficiency improvements have not been factored in.
Despite its upgrades, SBEM – being a simplified model that uses only basic information to determine EPCs – also poses potential problems for property owners given its reputation for producing uncertain results, which can often compromise the building energy labelling process.
Indeed, a misevaluated building resulting from the poor implementation of SBEM increases the likelihood of a property being downgraded (i.e. from 'E' down to a sub-standard, ‘F’) upon reassessment. The reverse outcome is of course also possible, whereby a building can be passed as meeting the required energy efficiency standards, when in reality it falls below.
You can read more about the risks posed by SBEM in our blog here.
How can I reduce my MEES risk?
For property owners with commercial buildings possessing an EPC rating lower than ‘E’, if you haven’t already, you must act now to implement energy efficiency improvements or face the risk of losing your ability to rent the property altogether (as well as facing a hefty fine).
For property owners with commercial buildings possessing an EPC rating of ‘E’ or even higher, it may not be wise to rest on your laurels.
Though ‘E’ rated buildings will be those immediately at risk, the UK government has declared their intention to raise MEES standards further so that the minimum will rise to D by 2025, and C by 2030.
While it may be only a relatively small number of buildings that breach MEES guidelines once they come into force on 1 April 2018, for many more properties it will only be a matter of time before they run into difficulty due to improving energy efficiency standards.
Therefore, even if your building currently has an EPC rating higher than ‘D’, the most environmentally and financially sensible decision will be to identify further energy saving opportunities now, and begin delivering on these improvements where possible.
Work with an expert
At SMS Plc, we provide a full spectrum of energy efficiency services to minimise consumption and deliver energy saving projects.
By offering you the tools, expertise and knowledge to help make better decisions, we can not only safeguard your building from MEES regulation, but also help you realise the most cost effective solutions to improve environmental sustainability.
Importantly, we also supply the resources, management and funding, reducing the delivery risk you face in effectively implementing your energy efficiency projects. Our services include:
EPC quality assurance
We scrutinise your EPC assessment and advise on accuracy to ensure models use the best available data for asset energy performances, providing a first step towards improving asset efficiency.
Energy Savings Opportunities – Evaluation, Design & Delivery
- Evaluation of potential energy saving opportunities for impact on EPC rating and for cost-effectiveness.
- Support in taking opportunities through to delivery, including design and specification.
- Provision of a turnkey delivery service (including funding if beneficial)
For more information on how we can help your property realise better energy efficiency, get in touch. Contact our Energy Management team on 02920 739 540 or email us we’ll get back to you.