Government keeping investors in dark on energy reforms: BPF

Industry association The British Property Federation has analysed commercial EPC ratings in seven major UK cities and says that although 80% of real estate is rated less than EPC B, the UK Government is keeping investors in the dark about future energy standards.

The research found that 83% of commercial buildings in London, Birmingham, Bristol, Leeds, Liverpool, Manchester and Newcastle have a rating below EPC B. Only 2% of commercial buildings have an EPC rating of A and a further 15% have an EPC rating of B.

The federation said that this shines a light on the scale of the challenge facing commercial real estate as uncertainty over future regulations continues.

There is a substantial range, however. Manchester topped the BPF table and 20% of commercial buildings have an EPC rating of A or B, while 19% of commercial stock in London has an A or B rating.

Leeds and Liverpool score 18% while at the bottom of the table are Newcastle with 16% and Bristol and Birmingham with only 15% of commercial space with an EPC rating of B or above.

The BPF points out that 85% of commercial assets in these two cities need to be brought up to EPC B in the next five years if the proposed 2030 deadline is confirmed.

This implies a need to improve over 5 million sq m of commercial floorspace every year.

 Even though 20% of commercial real estate in Manchester has an EPC of A or B, more than 10 million sq m is below EPC B, which the BPF points out is the equivalent of 83 Arndale Shopping Centres.

To bring all commercial real estate in these cities up to an EPC A or B by 2030 would require 94,595 sq m of space to be upgraded every day for the next five years.

The current proposals for EPC ratings in the commercial sector, consulted on in 2021, are a target of EPC C by 2027 and EPC B by 2030. To date, there has been no response to the 2021 consultation and this delay makes the proposed interim milestone of EPC C by 2027 unrealistic, and the EPC B by 2030 target increasingly challenging, the federation said.

Although the commercial real estate sector is committed to decarbonising and improving the energy efficiency of its buildings, the BPF has urged the UK Government to publish a full response to the outstanding consultation urgently and work with the sector to ensure the regulations can be effectively implemented.

The BPF said the research highlights the scale of the challenge in retrofitting commercial buildings in the UK and offered to work with the UK Government to help shape the MEES (minimum energy efficiency standards) regulations in order to bring as many properties as possible up to EPC B.

“However, the sector needs clarity on the timeline for new minimum energy efficiency standards and certainty that the EPC B target will be the end target, to give buildings owners the confidence to make long-term investment decisions,” the federation said in a statement.

“In addition, the BPF is seeking clarity on the rules around exemptions and enforcement and the split of responsibilities between owners and occupiers.”

Rob Wall, British Property Federation’s assistant director said: “Commercial and industrial buildings account for around a third of all building emissions. The sector has a critical role to play in tackling climate change. Yet the Government continues to keep owners and investors in the dark about future minimum energy efficiency standards.

“Our research shows the scale of the challenge we face in retrofitting our commercial buildings, across all asset types and across the UK. The lack of a response to the 2021 consultation is hugely frustrating and is making a tough situation worse.  The targets proposed in 2021 no longer look achievable, and we would call for the proposed interim EPC C target to be abandoned entirely.”