Energy efficiency changes just six months away

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From April 1, 2018 landlords will not be able renew or create new leases for rented commercial property unless the building has an energy efficiency EPC rating of E or better, and they are being urged to act now.

After April, 2023, all non-domestic buildings must have EPC ratings of E or better to continue renting to existing or new tenants. EPC ratings go from A to G, with G being the poorest.

Estates service Cushman & Wakefield estimates that as many as 20% of existing commercial buildings have EPC energy efficiency ratings below E. Landlords can act now to upgrade buildings with improvements such as insulation and energy efficient boilers, staving off the risk of them falling in value.

Quoted in an article from October 2017, Darren Finley of boiler installers Commercial Boilers said:

“It is important to act now rather than wait for the changes to come into force. There is mounting pressure to meet the new energy standards, particularly where tenancies are due for renewal in the first quarter of 2018.”

Rents can be raised to recover the cost of energy-efficient improvements, but as tenants are likely to experience lower energy bills, these savings may be able to offset all or most of the increased rent.

In many buildings, the cost of installing energy efficient systems should not be high. Bridging loans and commercial mortgage loan increases may be available for landlords struggling to finance improvements. A broker will be able to discuss all available finance options and source the best loans for energy efficiency improvements.

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