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Beware of the EPC requirements on commercial buildings, just around the corner.

Oct 25, 2015 By JP | Category:  Category: EPBD

Minimum Energy Efficiency Standards (MEES) are due to be introduced by Government legislation from 2018 (new leases including lease renewals), and from 2023 for all existing leases, and it will have a major effect on the markets.

Essentially the commercial building EPC is graded from A-G (A being most efficient and G least). The Governmentís aim is to improve energy efficiency over time and itís anticipated that buildings falling within bands F&G will need to have fabric work updates in order to allow re-letting and ultimately re-sale. Itís clear that it is older stock (particularly industrial premises) are going to be affected in the early days of this new legislation.

So, how will this impact property on lease renewal? Firstly this depends on whether the lease is protected under The L&T Act 1954 or not. For those not protected, itís likely that landlords will be able to incorporate new terms into any new lease, with costs passed onto the tenant. In cases where the lease is protected, this is still very much a grey area as to how it will affect new leases going forward.

Ultimately changes to the core content of any protected existing lease can only be changed significantly where both parties agree. The tenant is not under an obligation to accept such changes (which, in the case of MEES, would be significant increases in tenant liability).

We are still some short distance away from when such factors are likely to arise (2018 onwards Ė only 2 years) but these are factors which are likely to lead to a fresh wave of new case law to test the boundaries of what can be considered essential and fair. Landlords and occupiers alike should therefore prepare for potentially high costs and ongoing liabilities into the future, as the price of reducing CO2 emissions and improving building efficiency moves on.

ACI Reports recommend getting EPCs done now, to ďtestĒ your buildings and budget for the future. Forward thinking Clients are instructing us in large volumes to undertake an EPC on all their buildings; if you are concerned, get in touch and we can provide independent advice.


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