The new system will require an Asset Rating by an independent qualified assessor which, like the labelling on consumer goods, will show an A to G classification, with most new buildings being somewhere in the middle and older properties well down the scale.
In the short term, most will see the EPC as yet more bureaucracy adding only a tenuous argument for the capital expenditure required to improve energy efficiency in the long term – and with misgivings about whether this will have any beneficial effect on capital value.
David Rees, a Partner at Davis Langdon Crosher & James comments, “We may perhaps see more change than many people expect, as the EPC could produce pressure for building improvements from unexpected directions. Most PLC’s will have a Corporate Social Responsibility (CSR) policy and if these companies begin to set minimum standards for buildings they occupy, this could rebound significantly onto landlords.”
Pressure from investors in recent years has lead many larger corporates to look carefully at their credibility in terms of Sustainability and to adopt various energy awareness policies to meet society’s changing moral standpoint on the subject. The issue for commercial property investors will be if the PLC occupiers begin to add minimum standards for EPC ratings, then this could produce a pressure for building upgrades particularly when a lease renewal is looming. From the tenant perspective it is a double benefit of both adding to their sustainability profile, and following the improvements, enjoying the consequent lower energy bills. From the landlord’s perspective, the comfort of having major corporate tenants may be tempered by significant cost implications for upgrades which will need rather more than just thermostatic radiator valves. .
At this early stage, there is much to be learnt about how to achieve improvements in EPC ratings on the most cost-effective basis. Rees comments “Our interest in this area is both to have the capability to provide EPC’s to our clients – and more importantly to build up our research and data on how to make gains in Asset Ratings at the best value for money.”
Davis Langdon Crosher & James is the UK's leading property taxation and finance consultants. They have analysed over twenty thousand properties and have historically secured tax savings of more than £2 billion on behalf of clients.
