Landlords are under increasing pressure to address the issue of energy efficiency.
The Energy Bill received royal assent in October 2015, bringing the Energy Act 2011 into force. This means that from 1 April 2018, let properties need to have a minimum Energy Performance Certificate (EPC) rating of E. Landlords of commercial properties with a lower rating therefore have to take measures to improve the energy efficiency of these buildings, otherwise they could be penalised with a fine of up to £4,000.
Many landlords will find that relatively small changes will contribute significantly to making them compliant. Nevertheless, even if large-scale changes are needed, commercial landlords should not assume that a large capital expenditure is necessary to make their properties more energy efficient. In fact, viable financing options for energy improvement measures are available in today’s market.
Such arrangements typically enable commercial landlords to offset the cost of the equipment through energy bill savings. Once the equipment has been paid for, they have the option of increasing their margin or passing the saving to tenants and thus making their rental proposition more attractive.
A financing arrangement also helps landlords make carbon-friendly investments while keeping their existing lines of credit intact and preserving their working capital for other business activities. Payments can be customised to suit each client’s requirements and budgets, meaning landlords can focus on finding the best solutions for their premises without capital budget restrictions.
With this obstacle removed, there is no reason why landlords should not take action now to ensure their premises meet the requirements, to avoid fines and tenancy gaps that could arise from non-compliance.
A wide range of technology can contribute to an improved EPC rating. Landlords need to comply by April 2018, but by acting sooner they can benefit from the potential paybacks from the use of the technology and the associated energy savings earlier.
Richard Baker, sales manager, Siemens Financial Services Energy Finance