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So, what does this mean? We have been anticipating this for a while, albeit we are in Scotland so different legislation.
Basically those buildings we own leased to business entities (our entire portfolio) that are uneconomic to upgrade (most) will over time stop being commercial space , will get planning for housing, will get demolished, and the supply of smaller city business space will continue to erode. (there is not much left)
Fine, we are all more energy efficient, great sentiment, until smaller inner city office etc rents skyrocket due to reduced supply, eventually market equilibrium occurs but sorry, you will all be paying a fair bit more in rent because of this legislation.
This new MEES legislation only applies in England and Wales.
The Scottish Government has a new legislation which is : The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 No. 146.
Yes, we have a more benign regime, the catch is if one part of UK brings in more rigorous regime other parts in due course tend to follow suit. Look at Land & Buildings Tax and the leapfrogging effect.
A lot of tertiary commercial property is frankly uneconomic to make compliant, and of course it tends to be older so nearer centres of towns and cities- if one lives in a city with a lot of heritage/listed properties, like Edinburgh, then eventually you are forced to build flats rather than support business. We have over 100 commercial property tenants plying their trade in some pretty old properties.
The catch is politicians do not think everything through, if the workforce lives in the centre but business is by such measures pushed to compliant newer properties on the fringe, what is the climate change impact of all the employees travelling back and forward to work, that bit is ignored as they blindly chase building targets that are, overall, post COP21, pretty poorly defined and pretty poorly measured. (My daughter has a degree in sustainable development, her dissertation was connected with NCDs and their setting and success measurement issues re these, Iseem to have picked up a little knowledge (dangerous) through her writing process)
Is this applicable throughout the UK, or is it a devolved issue? Based on DJKL's response I suspect the latter, in which case the liklihood of it applying to the ungovernable here in NI is slim.
The MEES only applies to England and Wales and as yet Northern Ireland does not have an equivalent of the Energy Act or the Climate Change (Scotland) Act.
There is a draft Climate Change Bill, which has a target to reduce greenhouse gas emissions by at least 35% by 2025 compared to 1990 levels.
My wife and I own the freehold of a very small farm in England the majority of which is leased to a modestly successful tourist attraction which earns enough to pay us a small rent, pay the operator's salary, keep everything in good repair, and show a very small profit. There is a total of 6 buildings including an open-sided roofed play area. I have been advised that every building must achieve "E" including the open-sided building and the unheated storage buildings, and when I have quoted provisions which suggest that not all the buildings do need to achieve this standard I have been told I am wrong. I knew this was coming so the lease makes the tenant responsible for compliance but the cost of the assessment for the EPCs would wipe out his profits for a whole year. There is absolutely no prospect of converting these converted agricultural buildings to modern energy standards - and only 3 of them have any heating anyway. If I can't find a solution to this problem the tenant says he will not renew his lease in 2021 and I will then have to demolish the buildings. I am desperately trying to find an EPC assessor who can at least explore the possibility of exempting some of these buildings, and who will do an EPC assessment for a reasonable cost, and if anyone can make any suggestions please contact me at contact1 (at) perrygrovefarm (dot) co (uk)
Thankyou.
Thank you very much for your email. It appears that some of the information I had been given is just plain wrong! Compliance is going to be a big expense but I am beginning to see a way forward.
Since I started thinking about this I have been noticing a lot of commercial properties where compliance will be uneconomic. I suspect that a lot of owners of secondary investment property are going to get a nasty shock.
Exactly, before we got our actual legislation up here, when it was all mere discussion points in Holyrood and industry reports, we had a look through our portfolio re the likely art of the possible.
We worked out that it was likely that at least three large properties we owned would have to have been demolished (uneconomic to improve) and new build flats built on these sites for resale. Most of the rest of the portfolio would likely have been salvageable, but we are still talking 50% of a commercial portfolio.
To date legislation here not as bad as feared, but am not holding my breath, I expect , at some time, it develops more teeth.
Maybe I should buy shares in companies that sell/apply insulation