A report by construction data firm Barbour ABI reckons that commercial landlords in regions where property prices are low and demand has already faltered may simply decide that it is not worth investing in the changes require to meet new energy performance certificate (EPC) requirements.
“With high streets already under pressure and levelling up funding yet to make an impact, there is a considerable risk that we will see a significant decline in some towns and cities, with landlords deciding not to invest and meet these obligations,” said Barbour ABI chief economist Tom Hall.
Minimum energy efficiency standards (MEES) came into force in April 2023 as part of a national drive towards net zero carbon. They make it illegal to let offices and other commercial buildings if they fail to meet an EPC rating of E. Properties must reach EPC C by 2027 and B by 2030 to be let out.
Barbour’s analysis of recent commercial and office repair, maintenance and improvement (RMI) planning applications shows they are still down more than 40% on pre-covid levels despite the new regulation.
Almost three-quarters of the office stock in the major UK office markets will eventually be affected, Barbour ABI says, and 56 million square metres of commercial space is already failing to meet current regulations. The risk is that huge swathes of commercial building stock will sit empty, blighting urban centres that are already under pressure from retail closures. Areas outside the southeast are considered to be most at risk.
Norwich, Northampton, and Leicester have the most commercial property below Band E, at 14%. When looking at offices alone, Northampton, Huddersfield, Worthing, Leicester, Bradford and Hull all have more than 20% of building stock below minimum standards.
Barbour ABI has found no indication in recent planning application data that landlords in these areas are taking action to address the issue.
“The result is that many towns and cities will struggle to maintain the healthy stock of commercial properties needed to remain economically attractive, trapping them in a cycle of decline that has major implications for the future prosperity of these areas,” Hall said.
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