Energy Act changes on way

By Paul Beeston

From April 2018, changes to the Energy Act 2011 mean that it will be unlawful to sell or let residential or business premises which do not reach a minimum energy efficiency standard.

The Energy Act 2011 deals with energy efficiency, security of energy supplies and measures for reducing carbon emissions.

The largest part of the Act introduced the coalition’s flagship ‘Green Deal’ policy to encourage and facilitate the retrofitting of existing properties. The new proposals aim to strengthen the Act’s focus and will be introduced following industry consultation to ensure effective timescales and practical workings.

In the meantime, investors and landlords need to assess how the new laws will impact on their own property portfolio. Effective energy efficient measures are already expected to part of a buildings’ specification and the revised Act is set to raise the bar even further. In the same way that BREEAM is now very much a given on all new office buildings, energy performance certificates (EPC) that identify the potential for energy efficiency in buildings, will gain similar credence for the existing stock.

Going forward, buildings graded with poor energy efficiency ratings are unlikely to be considered a viable proposition by savvy investors in the run up to 2018. As a result, it is anticipated that building owners will allocate budget towards specifically improving the EPC rating of older building stock as demand improves, and secondary space is refurbished to grade A space.

The investment case is pretty compelling, particularly for original commercial stock that is 20 to 30 years old whose energy efficiency measures will be well below current standards. Being diligent in energy efficiency has evident rewards alongside keeping within the law.

For landlords, not only does efficiency help to maintain the value of the asset and secure tenants, the introduction of green technology may be eligible for enhanced tax relief on the investment too. From the tenants’ perspective, an energy efficient building satisfies corporate responsibility requirements, but a more significant aspect is the saving to the bottom line; less energy consumption reduces the bills and saves money. It’s as simple as that.

Ignoring the pending legislation is not an option, especially if current building stock has poor energy efficiency ratings. Any owner of a building should start taking stock now. It need not cost a fortune to ensure your asset remains competitive but it does need the right cost expertise to ensure it is achieved well.