Technical complexity, fear of spiralling costs and mistrust of changing legislation go some way towards explaining why 43% of property firms are not prepared for the Minimum Energy Efficiency Standards (MEES) that come into force in 2018, and why others are purchasing ineffective Energy Performance Certificates (EPCs).
So what should be on the radar of investor landlords and how do we defeat the rogue EPC assessors?
It is the building information that is of value and that drives the accuracy of EPCs. In today’s market, with so many insecure ratings, any reassessment will no longer rely solely on the certificate but will assess the background information instead. Those higher ratings that do not have the detail to corroborate may be downgraded.
Sourcing data on construction, materials used and services installed in the building will improve the accuracy of an assessor’s rating.
There’s another issue. While the assessor is checking the building, who is checking the assessor? The short answer is: no one. Only a team of people operating independently of one another will be able to provide the right information that can turn an F-rated building into one that is energy efficient and compliant.
Pressing problem for landlords before 2018
People fear the worst, but a review of your building may conclude there’s no drastic cost implication, rather simple changes to make over a period of time, such as lighting improvements. The recommendations should inform the decision of what improvements to make. Appointing a single (and unknowledgeable) assessor without an understanding of building construction will cost more in the long run.
With only two years to go, the problem appears to be a pressing one for landlords with multiple assets, but when regulation comes into effect, there may be margin within the timeframe to make improvements. If works required are cost-effective against capital expenditure then there’s no defence, but if payback for costs is going to take time then additional time may be granted to complete the works.
Landlords should also be aware of their tenants’ plans. It is common for fit-outs to be undertaken by a tenant but these works could affect the EPC rating.
It is feasible that a landlord will not want a tenant to remove certain aspects of a fit-out on the expiry of a lease, but a tenant might also dispute repair on the basis that the landlord needs to undertake a wider package of works to comply with MEES.
With this in mind, a more collaborative approach should be adopted when signing a lease.
A good EPC rating will place your building stock as first-tier. The increasing value of sustainability and wellbeing will drive tenants to buildings that have a positive impact on people and the environment. It is the level of information that will determine an EPC, and credible information will become king for the decision-makers.
Andrew Jenkins, director, CS2 Chartered Surveyors
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