Skip to content
Back to News

Commercial landlords risk being barred from letting their properties

In 2013, the government passed the Energy Act - a set of regulations and targets that was intended to attract investment and transform the energy market.

As part of the Act, legislation was introduced that made it unlawful to rent out a business property that fails to meet the minimum energy efficiency standard of E.

Currently, commercial properties over 50 sq m in size are required to have an energy performance certificate, but there is no legal obligation to carry out improvements. The new rules go into effect in 2018 and unless commercial property owners take steps soon to improve their inefficient properties, they could be barred from renting out their properties in the future.

Recent research from property agent Cushman & Wakefield found that nearly one-fifth of commercial property buildings fall below the minimum E rating. Another 19 per cent are rated E, falling just above the legal cut-off. While the E-rated buildings would be safe from current legislation, those properties still face a significant performance risk that could be problematic in the future.

As well as the financial implications of not being able to rent out their properties, owners of inefficient commercial buildings could also face penalty fines of up to £150,000 and see property values plummet as they become classified as "sub-standard". In order to rectify the issue, property investors and landlords might have to make costly changes to their buildings at short notice.

In order to prevent these problems, experts are recommending that property owners start taking steps to improve the efficiency of their commercial buildings sooner rather than later. Depending on the property and its condition, works could include installing thermal wall insulation, updating windows and installing energy efficient technologies like new boilers and LED lights.

Philip Webb from Cushman & Wakefield said that many companies are becoming increasingly concerned about their environmental impact. 

"Owners should bear in mind that occupiers will increasingly favour higher EPC-rated buildings, which will have lower running costs and help companies prove they have a strong sustainability track record," he said.