From 1 April 2018 the Minimum Energy Efficiency Standards (MEES) will come into force, making it illegal to agree a new lease on a commercial property with an F or a G Energy Performance Certificate (EPC) rating, unless the property is registered as an exemption. From April 2023 this will be the case for all existing leases, not just new ones. To help you understand what exactly is required and what exemptions are in place, a copy of the regulations can be found here.
Ian Shipley, Director within our Asset Management team who leads our energy services to the existing built environment provides some insight on preparing for the new regulations outlining how WYG experts will be assisting clients.
“Careful planning and preparation will be required to mitigate the potential impact, and we stress the importance to landlords and investors to take action now if they wish to avoid legal headaches in the near future.”
The potential benefits of early engagement in this process are wide-ranging and could have a long term effect on the way you manage and maximise value from your property investments. For example, this may mean the early disposal of properties at a premium market rate before they become a liability under the MEES legislations.
Alternatively upgrading an existing property’s look and feel can command higher rents or increase tenancy periods whilst also providing long term revenue savings from lower utility costs.
To help you prepare, it is important to establish how best to manage your MEES risk in order to effectively mitigate it, whilst making best use of any OPEX or CAPEX expenditure. We will audit your portfolio to confirm the buildings and tenancies to which the regulations apply and note exemptions based on building type/lease. For the remaining non-exempt buildings further analysis will be carried out to determine options, based around a whole life assessment of your properties. These options may include:
- Strategic Disposal – Where capital investment
cannot be justified our Strategic Real Estate team review the most
suitable opportunities for the property/site considering the current use
of the building/asset plus any more valuable potential uses.
Consideration is also given to market conditions in order to advise on
occupier and investor demand levels in order to provide comprehensive
advise on all options.
- Energy Improvement Works – We target works on areas
identified as having scored poorly within the EPC and where expenditure
is able to be capitalised. Where capital improvements are carefully
specified, these costs can often be offset within the first year through
Enhanced Capital Allowances. The works can often lead to a more
comfortable environment for users or and enhanced aesthetic appearance.
- External funding sources – We constantly review
Government sponsored initiatives to help with financing energy
efficiency measures such as loans or grants. Additionally there may be 3rd party finance options which operate on a ‘pay as you save’ basis which may be worth consideration.
- Renewable Solutions - As part of our option appraisal, we will consider the part that renewables or integrated energy storage solutions could have in reducing the impact of the EPC rating. This may include solar, wind, ground source, natural ventilation and many others. Our in-house services include:
- Strategic Real Estate
- Planning Services
- Energy Surveys and Inspections
- Low energy and renewable design services
- Low carbon funding advice
- Building Surveying
- Cost Consultancy
- Project Management
- Design and Specification
- Procurement and Contract Administration
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