Over 19,000 commercial properties no longer fit for occupation after energy performance regulations tighten

Data from property insight innovators, Search Acumen, has that found over 19,000 commercial properties may now be unfit for occupation following implementation of tighter energy performance regulations on 1^st April.

The Minimum Energy Efficiency Standard (MEES) was introduced in 2018, to set a minimum standard for Energy Performance Certificates (EPCs) at an E rating or above. Since 2018, landlords have not been able to grant a new lease for a property with a rating below an E. As of 1 April 2023, added regulations stipulate that the same rules apply not only new leases, but to properties landlords are currently leasing.

Search Acumen’s research, based on the data the government holds on registered EPCs, suggests there are currently 19,166 commercial properties for lease in the UK (including offices, shops, hotels, libraries, museums, education and healthcare facilities) with an EPC rated at F or G, below the minimum standard. In order to continue to be leased, in line with the new regulations, all of these properties will require an immediate upgrade to reach an EPC rating of E or above.

Property types with the most F and G EPC ratings are:

• • Offices – 8,139 properties
  • Retail – 6,600 properties
  • Storage and distribution – 1,198 properties

The data analysis also shows there are 32 libraries, museums or art galleries that fall below minimum standards, 26 hotels, 219 day care or community centres and 14 hospitals and care homes.

Table 1: Local authorities with the highest and lowest number of leased properties with F and G ratings 

Table 2: Local authorities with the lowest number of leased properties with F and G ratings

While there are over 19,000 properties leased with F and G rated EPCs, conversely there are only 2,438 properties with EPCs registered for the purposes of carrying out a lease with the two highest energy performance ratings, A and A plus.

Andy Sommerville, Director at Search Acumen, said:

“Tightening regulation around energy performance is an essential part of decarbonising our built environment however, inevitably, many commercial landlords will have been caught off guard.

“Many property owners will need to scramble to retrofit properties and, at a time when purse strings are tight, this may cause some issues.

“However, investment now in high levels of sustainability is essential for future proofing commercial portfolios and ensuring compliance with stricter regulation but also better meeting the needs of occupiers who are more focussed than ever on lowering their carbon footprint and their energy costs.

“We know time is of the essence while companies look to urgently address the changes made to the regulations.

“Search Acumen is here to make the job of property lawyer who is tasked with navigating this period of change, more time and cost-efficient, via digitalisation of the conveyancing process.”

Kindly shared by Search Acumen

Main photo courtesy of Pixabay