Commercial agents and landlords warned of energy efficiency regulation changes

Commercial agents and landlords warned of energy efficiency regulation changes

8:03 AM, 24th November 2022, About 2 weeks ago 19

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Propertymark is warning commercial letting agents and landlords about a change in energy efficiency regulations for business buildings.

They say that from 1 April 2023, the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 will apply to all tenancies, including those that are currently existing and ongoing tenancies.

The rule change will mean that landlords will not be able to continue to let a non-domestic property which does not meet the minimum standard rating of ‘E’ unless there is an exemption which has been registered.

‘Responsibility on landlords to make energy efficiency and heating improvements’

According to the government’s Heat and Buildings Strategy ‘around 40% of all energy consumed in commercial and industrial buildings in England and Wales is in the rented sector, placing more responsibility on landlords to make energy efficiency and heating improvements.’

In response to this, Propertymark has created a series of answers to FAQs to support their members and, in turn, their landlords which include details of the exemptions and enforcement.

‘Best to consult their local EPC assessors’

Anthony Meadowcroft, the NAEA commercial president, said: “Landlords that need an EPC will be best to consult their local EPC assessors in preparation for any effected change, along with planning if there are any energy efficiency upgrades required.

“As some commercial tenants have in place Full Repairing and Insuring (FRI) leases that put maintenance responsibility onto commercial tenants, there needs to be a strong and transparent re-enforced message that this change will indeed have to be actioned by the landlord and not fall onto the tenant.”

Energy efficiency changes in commercial buildings

Propertymark members can access the FAQs about energy efficiency changes in commercial buildings by logging into the site’s member area.

The organisation also held an Assessing Commercial Property and Business Values webinar on 15 November where attendees discovered how current factors such as inflation and cost of living may have a knock-on effect on sellers pricing and buyer demand in both the leisure and retail markets. Agents can also download a recording of the webinar.



Comments

John Grefe

12:41 PM, 24th November 2022, About 2 weeks ago

Hi. re: energy costs and ECP new requirements:
I have a large house with six tenants (HMO of course).
The monthly energy DD was £350, now £516! So, I have decided to reglaze the north elevation replacing existing d/glazing to triple. Also, scrap the gas boiler for a German made Air to water heat-pump. In addition, have installed solar panels for generating electricity with a battery storage. The idea is to use stored electricity before going to the grid. I target is to reduce my energy DD costs below £350 per month. We shall see. Care to comment? Thanks

Martin Weaver

13:28 PM, 24th November 2022, About 2 weeks ago

Reply to the comment left by John Grefe at 24/11/2022 - 12:41
Air source heat pumps work well with under floor heating, but if you have radiators they will probably need replacing with larger ones - extra cost
Also you will need a ASHP specific hot water cylinder.
If you have an ASHP forget the Battery as the ASHP will take all the electric you can produce or will drain your battery very quickly
Talk to an expert !!

DAMIEN RAFFERTY

14:30 PM, 24th November 2022, About 2 weeks ago

Wow, triple glazing, air to water German heat pump and solar panels. Deep pockets comes to mind.
Hopefully that will get you to Band B at best.
Saving you £200/300 a month.
Payback what 15 years ?

Darren Peters

14:40 PM, 24th November 2022, About 2 weeks ago

It's just not 1 April 2023 for band E to worry about. The government is proposing minimum EPC band C, from 1st April 2027, and minimum EPC band B from 1st April 2030. This is for commercial property. I'm not sure how most existing commercial can be brought up to band B without solar and heatpumps on top of the insulation needed to get to C
Might make sense in a shop or office where people mill about. But there doesn't seem to be consideration for a big warehouse full of cement or timber that won't be heated. Similarly an MOT centre or tyre place that leaves its big barn doors open

Beaver

14:41 PM, 24th November 2022, About 2 weeks ago

Reply to the comment left by DAMIEN RAFFERTY at 24/11/2022 - 14:30
I think we are looking at tens of thousands of pounds per property and increasing rents by at least 50% to cover the extra investment and risk unless the capital allowances system is changed such that the costs can be offset against revenues.

Darren Peters

14:46 PM, 24th November 2022, About 2 weeks ago

Reply to the comment left by John Grefe at 24/11/2022 - 12:41
Octopus energy are doing a test run where they take control of your battery in return for selling you electricity at 1/3 the price current price.

Might be worth talking to them.

Their theory is that if they control enough batteries they can buy in bulk at the the cheapest time of the night, store in the batteries and use in the day instead of buying expensive peak time electricity.

Beaver

15:00 PM, 24th November 2022, About 2 weeks ago

Reply to the comment left by Darren Peters at 24/11/2022 - 14:46
Any idea of the total cost of this investment in total? And how much of this investment can be offset against your revenues as revenue expenditure? Or is it all capital expenditure?

Darren Peters

15:06 PM, 24th November 2022, About 2 weeks ago

Reply to the comment left by Beaver at 24/11/2022 - 15:00
Sorry, no. This is based on a neighbour's home. They have just increased their solar capacity and added a powerwall (battery). When I asked about how much less electricity they needed to buy they explained the Octopus thing. They didn't get a heatpump for whatever reason.

The powerwall was £9,000. Spec here:

https://www.tesla.com/en_gb/powerwall

A heatpump 10-£20,000 depending on how much your existing system needs upgrading.

No idea on cost of solar installed.

John Grefe

16:06 PM, 24th November 2022, About 2 weeks ago

Hi Martin Weaver; Yes we have experts 🤔 & 4 Grn. source h/pumps. Am I assuming you are talking from experience? I will have a HW cylinder Thanks.
Hi Damien Rafferty & Beaver; Costs about 40K plus additional costs for lowering the ceilings from 2.9 to 2.5M & decorating. Pay back is a good idea BUT, pay back is providing hopefully a better product for our children! I'm 73 now!
Hi Darren Peters; Interesting point about Octopus 👍
Tax ? Humm, as I understand it gas boiler and glazing replacements possible (?) are tax deductible. Plus, a government payment of 5K for the h,/pump. The rest, not sure. Any comments on that issue? We need to do something about our World, don't we? Thanks for your time

Darren Peters

16:14 PM, 24th November 2022, About 2 weeks ago

Reply to the comment left by John Grefe at 24/11/2022 - 16:06
Is there anything out there that details what is required to attain a C or B rating on an existing commercial property?

I have a suspicion that a lot of commercial will be impossible to bring up to B for less than the cost of demolition and rebuild with smarter materials. That's without getting into how this can be done without a tenant in situ and who pays - the landlord or the tenant who benefits from the cheaper energy cost.

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