New research: office occupiers in retail sector not ready for April energy standards deadline
A new study by Irwin Mitchell has found that only a third of office occupiers in the retail sector know how energy efficient their office buildings are, despite Minimum Energy Efficiency Standards (MEES) coming into effect from 1 April.
The new legislation means that property owners must not continue to let properties that have an Energy Performance Certificate rating of F or G (unless they have an exemption) and all let properties will need to have a minimum EPC rating of E.
Despite the rules only being months away, Irwin Mitchell’s study – ’Redefining the Office – A report on office occupier trends’ – found that only 32% of the 500 UK office property decision makers questioned knew the EPC rating of their main office building.
Within the retail sector, 31% of respondents said they knew the EPC rating of their main office building, while only 27% said they knew what it needs to be in April.
Furthermore, a third of the property decision makers in the sector were not aware of their office’s EPC rating and another 7% admitted they did not know what it needed to be for compliance in April. Additionally, 10% of respondents said they did not understand EPC ratings.
Tim Rayner, joint head of real estate disputes at Irwin Mitchell, said: “These figures should raise eyebrows, particularly given the changes come into force in April and with further new Minimum Energy Efficiency Standards (MEES) legislation down the line. For example, for all new tenancies beginning in 2025, the government is keen to change the minimum rating to a C”.
“Office occupiers really need to keep an eye on the situation. Whilst the cost of upgrades is in theory an issue only for landlords, some landlords may prefer not to incur that costs at all and instead try and end the lease. Those landlords who intend to carry out the upgrades may not only want access to the premises and cause potentially significant disruption but may try and pass on the cost of the upgrading either via the service charge or by seeking to include additional obligations in new leases, making tenants expressly liable for such costs.
“The MEES deadline is fast approaching and therefore it’s important that tenants are forearmed and ensure, for instance that their leases provide the controls they need.”
The survey also found that UK businesses in the sector seem to be on the move with many looking for higher quality space than they had previously. Over half (52%) of respondents said they have either moved their office space in the last 12 months or are considering moving now. Over a third (38%) said they either took on more office space in the last 12 months or plan to in the future.
Irwin Mitchell said a major reason for this appeared to reducing energy bills and improving energy efficiency.
Some 69% of respondents in retail said they would be prepared to pay a higher rent for office space which reduced their organisation’s impact on the environment. This was lower than in some other sectors such as finance (88%) and IT/telecoms (92%) and the national average (84%). However, businesses in the sector wanted some reductions in their service charges to make up for paying higher rent.
