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Urgent upgrades needed for London’s commercial stock

By: Kelly Bellerson
Press Release
17/03/2023

Around 8% of inner London commercial stock will be unlettable by the 1st of April, according to a recent study.

Commercial properties will be required by law to hold an EPC E rated certificate to meet the new Minimum Energy Efficiency Standards that come into force next month.

So, what can London’s commercial properties do to meet these requirements and why do they keep changing?


London stock statistics

A report published by BNP Paribas Real Estate found that around 8% of inner London’s commercial stock will be unlawful to let come April this year.

By 2027, this figure changes from 8% to over 50% under proposed MEES. That’s an additional 43% of inner London commercial stock, on top of the reported 8% for April 2023, that will be unlettable within the next five years.

Only 26% of stock was rated EPC C however, these properties may not meet the new Minimum Energy Efficiency Standards of 2030 if upgrades are not undertaken in due course, and just 23% of properties had an EPC rating or A or B.

Following the Spring Budget, the urgency of ensuring the appropriate upgrades are implemented to meet the changing standards is highlighted, as rising construction costs and labour shortages continue.

The report takes data from their December 2022 stock review, in addition to the latest figures from the Government’s non-domestic EPC register, and includes buildings which are eligible for exemption.


Current EPC ratings

Until April 1st, commercial properties can have an EPC rating from A to G. When the new Minimum Energy Efficiency Standards come into law next month, these buildings must have an EPC E rating to meet the new minimum requirement.

April 2027 has been outlined as the next time MEES change for commercial property, jumping from EPC E to EPC C.

Residential properties and homeowners don’t need to worry too much for the time being, as EPC requirements for domestic builds aren’t expected to change until April 2025 (for new tenancies) extending to existing leases as mandatory in 2028.

Homeowners can get ahead of the groove and start planning and preparing for these changes though, when the minimum requirement increases from EPC E to EPC C.


Meeting the new MEES

There is still time before the 1st of April deadline to improve EPC ratings in accordance with the new Minimum Energy Efficiency Standards.

Depending on how much improvement works your commercial property needs, landlords should consider everything from retrofitting to replacing lightbulbs with LED bulbs.

Landlords can start by implementing a number of low-cost measures such as turning down thermostats, having boilers serviced, and upgrading insulation to quickly improve the building’s energy efficiency.

A chartered building surveyor can recommend the best upgrades for your building to ensure EPC certificates are compliant with MEES.


What are MEES?

The Minimum Energy Efficiency Standards (MEES) was introduced in 2016 as law for domestic properties, outlining the minimum energy efficiency rating each household is required to have, which currently stands at EPC E.

These standards are now extending to commercial properties as of April, when they will be required to have an EPC E rating too.

MEES have been introduced as part of the Government’s 2050 net zero plan which aims to reduce the amount of carbon emissions the UK produces and help combat climate change.


Why are they changing?

The UK’s built environment is responsible for a quarter of greenhouse gas emissions, alongside transport and consumer expenditure, who are among the biggest carbon contributors in the country.

In 2021, the Government introduced their net zero target for 2050 and began to draw up amendments for existing laws, as well as create new legislations, to reflect their commitment to net zero and keep industries in line with their objective.

Legislations are changing across the board and for the property industry, commercial and residential, the sector is seeing a shift towards more sustainable practices from construction to property management.

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