Nearly two-fifths (39%) of commercial landlords are unaware of new standards on Energy Performance Certificates (EPCs) coming into force in April 2023.
Research from property business company Handelsbanken suggests only one in 10 (9%) currently has an EPC rating of E or above for all their properties.
As part of a government drive to improve the energy efficiency of rentals, both residential and commercial, from next April a certain EPC rating must be achieved. For commercial units in England and Wales it means a rating of at least E in order for it to be allowed to continue being let.
Currently, an EPC rating of at least E is a legal requirement for commercial properties before they can receive a new or renewal lease.
Handelsbanken’s study, which questioned 120 commercial landlords, found many are planning to invest in their portfolios by upgrading them to improve energy efficiency. Four in 10 said they would install insulation with 36% investing in an energy efficient boiler and nearly a third (30%) fitting double glazing.
Just over a third (35%) said they would buy newer properties instead of older, less energy efficient ones in future.
Around a sixth (16%) of commercial landlords surveyed said they are planning to sell their properties as they find the new EPC requirements too daunting. This is mainly as a result of not being able to afford to make the required changes. The average investment per portfolio is expected to be £95,400, or 3% of the portfolio’s total value.
The main reasons given among those without a plan, were that regulation makes it too difficult to do so (42%), a lack of knowledge about what changes to make (38%), and not believing they can access the right finance (14%).
Sheldon Bosley Knight’s associate director Mark Treadwell said: “It is worrying so many commercial landlords said they were unaware of this change in legislation.
“However, it is encouraging many have already or are undertaking steps to bring their properties up to standard such as installing insulation and putting in double glazing.
“What is clear is how expensive it is going to be for those who have not or who are going to do the necessary work, especially as the cost of living crisis means money is tight across the board.
“We would encourage all commercial landlords to take a long-term view on the issue and, if they can, view any improvements as an investment, not just to their tenants but to the environment as well.
“Anything you can do to improve energy efficiency at this stage will pay back in terms of lower energy costs and reduce your carbon footprint which is a win win.
“For those struggling to know what to do in order to bring their properties up to standard, please do get in touch with the team here at Sheldon Bosley Knight. We will be only too happy to offer advice and support on the best way forward.”