Under new Energy Performance Certificate (EPC) regulations, 17% of the UK’s investment real estate could be unlettable in five years’ time, consulting engineer WSP said.
The provisions, detailed in the Energy Act, make it mandatory for commercial properties with a poor energy rating (lower than ‘E’ rating) to be brought up to standard before they can be let.
WSP’s research, from analysis of more than 4,000 EPCs it has undertaken since its inception in 2008, shows that this could apply to 17% of commercial property, rising to 35% if ‘E’ rated buildings are included.
WSP added that as EPCs are benchmarked by building regulations that are continually updated and revised, even ‘safe’ ratings such as ‘E’ and ‘D’ may not meet the standards required in 2018.
WSP’s research shows that in London the figures are marginally better than the national average. One in seven, or approximately 14% of London’s commercial property will need to be brought up to scratch, rising to 35% if ‘E’ rated buildings are included.
WSP associate director Daniel Grandage said: "There is a significant threat to commercial property owners that they will lose income if they are not aware of, and do not react to, these changes.
“Although the regulations will not come into force until 2018, they are already having an impact with buyers now looking to invest in D rated assets or above. It shows just how important it is to understand the risks that face your portfolio so that you can be prepared and take action.”
WSP says there are some simple ways of improving a building’s energy performance rating, such as obtaining accurate data and avoiding the use of default assumptions. However, upgrading to efficient lighting will have the biggest effect on ratings, it says.