The regulations came into force on 1st April this year and apply to both commercial and residential property. The Regulations state that properties with an Energy Performance Certificate (EPC) rating of F or G are to be classified as “Sub-Standard”. The clock is ticking….
From 1st April 2018 Landlord’s of commercial property must not grant a lease of “sub-standard” property
From 1st April 2023 Landlord’s of commercial property must not continue to let “sub-standard” property
It is estimated that approximately 20% of property falls within the, “sub-standard” category.
The market for commercial property has been strengthening in the last 18 to 24 months, particularly from investors wishing to purchase industrial units. We have clients who are keen to purchase industrial properties but are unable to source suitable properties to buy. The impact of this is that prices have increased.
Demand for office space and retail space is weaker. However, the market has improved since the downturn in the economy.
So what will be the impact of the change in legislation?
If a property falls into the sub-standard category then as of 1st April 2018, owners will be unable to grant a lease of the property. This will limit the income that can be generated from the property. Potential purchasers are already seeking properties that have an EPC rating of E or better. Discounts will need to be offered on “sub-standard” properties.
The solution will be to undertake improvements to the building which could be costly depending on the extent of those required. We would encourage landlords to take control now and implement a strategy to mitigate any costs/losses.
For further inquiries contact
simon.geary@fishergerman.co.uk Knutsford office 01565 757977
william.lewis@fishergerman.co.uk Chester office 01244 409671