Sustainability moves up agenda

Real estate 360

After a slow start, investor attitudes towards environmental sustainability have started to evolve. It is no longer seen as just a nice to have. Changing regulations mean environmental sustainability credentials will have a significant impact on property values. A clear majority now see it as a key factor in investment decisions.

From 1 April 2018, landlords will be prohibited from issuing new leases on properties that have a low energy efficiency rating. The new Minimum Energy Efficiency Standards (MEES) will make it unlawful to grant or renew a lease for a building that has an EPC rating of F or G. The updated rules will have a significant impact across the sector.

As Jon Anderson, Head of Office at Lambert Smith Hampton says, more sophisticated measurement tools mean the way EPC ratings are calculated has changed.

Buildings that previously rated as D or E grade just 10 years ago, may now been in danger of dropping to non-compliance.

Jon Anderson
Head of Office, Lambert Smith Hampton

Recent DCLG (Department for Communities and Local Government) figures confirm that there are just over 740,000 non-domestic EPCs registered in the UK, and 50 per cent are in the D or E category. There have been instances of old EPCs slip two ratings when reassessed, pushing category D or E properties into the F and G bands. This will start to have a large bearing on lease events over the coming years.

Landlords must familiarise themselves with the updated rules and review their EPC ratings against the new criteria. It is likely that many will need to take development action to protect their position. Those that fail to observe the changing rules could soon find they are unable to let their properties. The time to act is now.

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