With 12 months until the Minimum Energy Efficiency Standards come into force, real estate software provider Arbnco has released a guidance report for commercial real estate (CRE) investors and landlords to help achieve MEES compliance.
The Minimum Energy Efficiency Standards will require properties to achieve a minimum ‘E’ rating and will apply to new leases and renewals from April 2018.
Research produced by Arbnco (formerly known as CO2 Estates) has found that the estimated 19% of properties not complying could see their capital value reduced by as much as 10% with the impact on the total UK value estimated to be as much as £16.54bn*.
The paper contains a five-step plan to achieving MEES compliance:
1 Portfolio Review: identify properties with no EPC, review lease renewal dates and decide whether a new EPC is required.
2 Confirm that ‘at risk’ properties, (F and G EPCs) are really F and G by undertaking new EPCs to provide accurate and dependable ratings before undertaking any retrofit works.
3 Identify means of retrofitting ‘at risk’ properties to achieve an E rating or better and assess the cost of compliance. Review impacts of future refurbishments and planned preventative maintenance (PPM) schedules.
4 Incorporate energy efficiency improvements into retrofit and PPM schedules.
5 Update leases, tenant fit-out and dilapidations processes to allow for appropriate provisions for the landlord/owner to continue to comply with the requirements of MEES.
Pauline White, underwriting analyst at Zurich said: “In a matter of days we will begin the 12 month count down to the regulations coming in to force in April 2018.
She went on to say: “Action now to identify at risk properties and the costs to improve them will be time and money well spent. Without this, the owner could end up with a property that cannot be let, potentially long term unoccupied that becomes a drain on resources instead of generating an income.”
Simon West, founder of Arbnco said: “All landlords will potentially be affected by the MEES regulations, irrespective of the size and nature of portfolios and early action is advised to mitigate the impact. Landlords and CRE investors need to acting now to alleviate the risks posed by MEES legislation ahead of the April 2018 start date.”
Arbnco will launch its Arbn Consult software platform to the consultant and EPC Assessor market from April 2017. It enables quicker and better decisions to be made on the energy performance of commercial property. The software provides the ability to quickly and accurately assess the EPC rating improvements required to ensure a property meets MEES regulatory compliance.
The full guidance report can be downloaded from: http://tinyurl.com/MEES-
* Notes about figures:
The July 2016 IPF report on size and structure of the UK property market estimated the total worth to be £871bn.
2014 research figures from Landmark Information Group showed that 19% of Energy Performance Certificates in England and Wales are currently F or G rated. The figures were cited in The Green Construction Board, Mapping the Impacts of Minimum Energy Efficiency Standards for Commercial Real Estate, August 2014.
Therefore, an estimated £16.54bn of total commercial property is estimated to be not currently complying with MEES legislation.
