Analysis: Why 8% of London commercial real estate may be unlettable due to EPC changes

A study by BNP Paribas Real Estate has found that up to 8% of existing inner London commercial stock could be rendered unlettable from April 2023 due to new Energy Performance Certificate requirements.

In the wake of a hard-hitting report from real estate firm Savills which indicated that 185m sq ft of all retail space in the UK could soon become ‘unlettable’ (1), there has been a further wake-up call about the imminent enhancements to the UK’s Minimum Energy Efficiency Standards (MEES).

As initially introduced in 2015, the MEES specified that property owners or landlords could not grant a tenancy to new or existing tenants of properties with an Energy Performance Certificate (EPC) rating of F or G – the categories considered as being ‘sub-standard’.

But the new measures coming into effect on 1 April 2023 mean that it will also be unlawful to continue to let properties with an F or G EPC rating. Consequently, all let commercial properties will need to have a minimum rating of E; those falling below will require all cost-effective energy efficiency improvements defined by MEES to be undertaken by the deadline.

This prospect had already been causing a wave of concern across the UK’s commercial property sector, with the Savills report highlighting the challenge of upgrading the 150m sq ft of ‘at risk’ space which is the responsibility of smaller investors. This type of property is often the subject of fragmented ownership and is in locations where other other occupational challenges exist.

‘Get works done and get it right’

Now a new study by BNP Paribas Real Estate has turned a particular spotlight on the worrying implications for commercial stock in inner London. Under the changes being implemented on 1 April, it is suggested that 8% of properties could become unlawful for new lettings and unlawful to let if they are not brought up to the standard of the new MEES requirements (2).

8% of properties could become unlawful for new lettings if MEES guidance is not met

BNP Paribas

The study also looks ahead to the next wave of EPC changes, due for implementation in April 2027. By this time it will be necessary for properties to have attained a C rating, making it unlawful to let those which now hold a D or E rating. By BNP Paribas’ calculation, this represents a remarkable 43% of inner London’s present commercial stock.

With non-domestic property already feeling the pinch due to the rise of remote and hybrid working, the imperative for landlords and owners to take action is in no doubt. “It’s crucial at this time to get works done and get it right,” commented BNP Paribas Real Estate’s head of ESG and sustainability, Donna Rourke.

Specialist support & trusted technology

As the BNP Paribas Real Estate report indicates, engaging with specialists who can help guide the necessary upgrades is a hugely beneficial move. In particular, they can steer owners and landlords towards new technologies that will improve the efficiency of everything from individual systems (eg.

We need a focus on new solutions that will boost the efficiency and sustainability of buildings everywhere.

Priva UK

Heating, cooling and air conditioning) to overall building control and performance analysis (via an on-premise or cloud-based building management system).

Priva is ideally placed to fulfil this role as the company has always welcomed regulatory changes that improve building performance – mirroring its own continued focus on new solutions that will boost the efficiency and sustainability of buildings everywhere. 

We are therefore happy to speak to any commercial landlords, commercial real estate operators or managers who want to make their buildings more energy efficient, smarter and intelligent. Drop us a line. 




Photo by Alex Tai on Unsplash

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