Market View

Each week TheBusinessDesk.com asks experts from Yorkshire's commercial property community for their views on a burning issue affecting the market.

This week's question is:

How big an issue for the property sector is the introduction of Energy Performance Certificates (EPCs) for commercial buildings?

Richard Bamford, senior director in the building consultancy team of CB Richard Ellis in Leeds:

“The substantial shortfall of suitably qualified assessors available to carry out the energy certification process has resulted in the recently announced delay of their introduction.

“When the new legislation is finally introduced, it could have significant implications at the commercial end of the property market.

“As energy issues become more important and utility bills still continue to increase year on year, EPCs may well become critical when negotiating property transactions as they demonstrate how well a property is likely to perform.

“Poor ratings may have a negative impact on the lettability and liquidity of stock. However on a more positive note, poor ratings also present a strong opportunity for strategic asset management and refurbishment. Although it is unfortunate that talk of incentives or grants to improve a building's performance have not yet materialised.”

“We strongly recommend that Yorkshire property owners take note of this legislation and start taking steps to comply.”

Alan Hutchinson, head of investor property management in Jones Lang LaSalle's Leeds office:

“The implementation of EPCs will certainly prove a challenge for all stakeholders in the property industry. Our estimates suggest that approximately 85% of all office space in central Leeds is more than five years old, and following the introduction of EPCs, the physical status of most of these buildings will have to be reviewed.

“It will also be essential to carry out a review of offices as they come up for sale or lease because it will be a legal requirement for a building owner or tenant to provide an EPC prior to sale or let. Those who do not comply are not only in danger of being fined, but face damaging their firm's reputation.

“The Government recently introduced an element of flexibility for commercial buildings, to delay the requirement for EPCs for properties already on the market on the due EPC qualifying date of either April 6 or July 1 2008.

“This comes after the property industry expressed concerns at the current levels of preparedness in both the public and private and sector, particularly at the low number of accredited energy assessors being available to meet demand.”

Alex Bolton, senior surveyor at GVA Grimley:

“Generally seen as a good idea in principle, I would expect the new requirements to initially slow down the market. Finding enough qualified assessors will be the first challenge especially since the training programme has only recently been introduced by the Government.

“The added cost is a frustration but is likely to be passed on to the eventual purchaser or tenant in one form or another but in the meantime there may be a rush of properties coming onto the market to try and beat the July 1 (for non-domestic buildings over 27,000 sq ft) and October 1 (for all remaining non-domestic buildings) deadlines. Provided buildings have been let or sold by October 1, then the requirements will not take effect.

“You may be forgiven for asking why there are so many variable elements that are mandatory for new developments such as BREEAM, Part L of the Building Regulations and renewable energy technologies. Ideally these elements should be brought together into a simple measure of 'Sustainable Development', which is recognised globally.

“However until then EPCs have to be taken seriously, with fines being levied by Trading Standards of up to £5,000 for non compliance. In the long run I would expect that the industry will absorb these new requirements into standard practice and they will become another hoop to jump through.”

David Robinson is a specialist in building consultancy at Knight frank in Leeds:

“The first phase of the EPC programme has been delayed as the schemes are not quite ready, with a shortage of certified energy assessors, combined with software glitches.

“Achieving carbon neutral new commercial buildings by 2019 is achievable and we should strive towards this goal. However, it very much depends upon government commitment and changing occupier expectations in terms of indoor environment.

“The introduction of Energy Performance Certificates on commercial buildings this year will focus attention on energy performance, especially as an A+ rating is for buildings with performances that are better than net zero CO2 emissions.

“Furthermore, from October 1 Display Energy Certificates (DEC) are required for publicly occupied buildings over 10,700 sq ft in England and Wales, which publish actual energy usage and must then be produced annually, eventually referring to progress over previous two years. This could pave the way for government to introduce incentive schemes and/or punitive measures in future taxation or rates regimes.”