Investing in commercial property always carries an element of risk, particularly where the value of that property is determined by its rental performance. With the MEES Regulations now making it unlawful to grant a letting* of properties with an EPC rating of F or G, investors must ensure that their properties are not at risk of failing compliance.
Whilst the current risk identified lies within the 18%** of commercial property with F and G ratings, the hidden risk is the more substantial 47%** of commercial property with D and E ratings where it is frequently the case that sitting tenants are able to have these ratings legitimately downgraded to non-compliant F or G ratings, thus making the property ‘sub-standard’ according to the Regulations and thus no longer able to yield a rental income.
As an investor therefore, it is vital to understand the current and accurate EPC rating of your existing and targeted properties and to take due lease advice to ensure the value of the investment is not at risk from the MEES Regulations.
*including renewal or extension leases to existing tenants