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Government Warning for Commercial Property Prices as Plans for New Energy Legislation Are Announced

on Friday, 13 January 2017.

The government has recently issued a stark warning that upcoming energy legislation could lead to £16.54 billion being wiped off the value of commercial property in the UK.

The Minimum Energy Efficiency Standard (MEES), which is set to come into force in April 2018, will require commercial properties to achieve a minimum ‘E’ rating and applies to new leases and renewals. It is thought that upto one in five commercial properties in England and Wales may not comply with the legislation. This is based on research figures from 2014 which showed that 19% of Energy Performance Certificates (EPCs) in England and Wales are currently F or G rated. This translates into an estimated £165.49 billion of commercial property which is not currently complying with MEES legislation. Maureen Eisbrenner, managing director of tech developer, CO2 Estates, said: “Landlords and tenants are being forced to reassess the energy performance of buildings because legislation has, for the first time, created a mechanism for monetising energy efficiency.”

Research produced by CO2 Estates has found that these predictions could result in the capital value of non-compliant commercial property in the UK being reduced by as much as 10%. Pauline White, underwriting analyst at Zurich Insurance plc, said: “It is clear there is a lack of awareness surrounding the MEES legislation... almost half (43%) of property portfolio managers have not yet assessed their portfolio’s risk in relation to MEES. There is no doubt the MEES legislation will have an impact on commercial property portfolios. There will also be added confusion as there are different stances being taken by the Scottish Parliament and Westminster, which will only add complexity.”

If you would like property investment advice and legal support from experienced solicitors, please visit our Commercial Property page for more information.


For futher information, please contact Chris Mullett in our Commercial Property Law Team on 0117 314 5241.

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