EPC rules are changing – finally!

Some while ago I blogged about how the rules for the provision of energy performance certificates on commercial property were planned to be changed – but kept being delayed. Well finally the new rules are coming into force – from the 6th April 2012.

That is obviously good news for me as an energy assessor, but it will I hope also make people on both sides of property transactions far more aware of the effect of the energy efficiency of their properties on business generally.

At a business lunch I attended this week I was discussing ‘green buildings’ with a couple of banking clients. They still have to see this having any effect upon their lending – either from a security point of view or value stand point. What they are very aware of though is the long-term potential that the energy legislation may have on their security – the proposal that all F & G rated properties will become un marketable from 2018 is already on their radar. The ‘official line’ they have been told by the powers above is that the Government are unlikely to miss their proposed changes in legislation.

This highlights one of my pet hates – lazy landlords – get the easy things done to your properties in terms of ‘greening’ them before marketing. Things like low energy lighting, insulation and replacing old inefficient heating systems. It can make a huge difference to you epc rating.

You have been warned!

 

Is it really that difficult to pass legislation?

As a profession we have a vested interest in environmental matters, whether or not ‘green buildings’ are capable of attracting higher values is up for debate (see my colleague Tim Garratt’s recent research). But, one thing we can do is ensure purchasers and tenants of commercial property at least have an idea of how energy-efficient their buildings are. Enter the Energy Performance Certificate (EPC), one of our industries most maligned pieces of paper!

How green is your building?

The residential market has been more EPC savvy than the commercial world for a while, the law has required all residential agents details to have the EPC graph displayed (and consequently the public have come accustomed to it). The Government however in their infinite wisdom decided that the commercial property market wasn’t ready for this level of enforcement (despite it being far smaller than the residential market) and consequently the requirements for EPC’s on Commercial property were ‘wishy washy’ at best, and easy to ignore at worst.

The upshot of this was that EPC’s are not generally prepared before marketing (which they should be) and tend to be prepared just as the property is in lawyers hands – once the deal has been agreed. Consequently the property decision has been taken without any view to the energy efficiency of the building – no wonder green buildings currently show no premium value over ‘ordinary’ buildings!

However, finally last year the Government announced their proposals to bring the Commercial Property world in line with the Residential market – through their proposals for the amendments to the Energy Performance of Buildings (Certificates and inspections) (England and Wales) Regulations 2007 – otherwise known as the EPD regulations.

But, (and there is always a ‘but’), the regulations were supposed to come into force in June 2011, but they were delayed until October 2011 – and now we are being told that they will be delayed until April 2012! We were only told this on Friday by the CLG, so most agents are already in the process of preparing for the changes, so why the delay of almost 12 months in total?

No one really knows, according to the CLG the proposals are still the same as they were at the start. What is clear is that the current situation will prevail until Easter 2012 at which point there will probably be a mad rush to comply by agents who no doubt currently feel ‘relieved’ that they don’t have to get their EPC’s quite yet!

I am still hoping that my work load on EPC’s (I am an assessor) will increase over the next 6 months as people get ready for the change (assuming it is not delayed again), but I am not holding my breath!

So thanks CLG for again being a great help on this!

 

The ‘joy’ of online systems!

One of my roles at work is as an energy assessor – it is through my training for this role that I have developed my interest in the ‘green agenda’. I am qualified under the RICS who are my professional body as a Chartered Surveyor.

So far so good – the system I have to use to enter my data for energy assessments is an online one, called Lifespan SBEM – it is quite user-friendly and generally works well. As with all online systems it has its moments. Sometimes I have to log out and back in as it will freeze, but this is not a major issue, just an annoyance.

However, today I was planning to do a lot of inputting to get a number of EPC’s sorted for Monday – this is one of the joys of online systems – you can work from anywhere that has access to the web. So up early this morning to watch the Grand Prix and input data.

Lifespan SBEM is working fine today as a website, but, and here is the problem as I see it with lots of on-line systems, it needs to link to another site (Landmark) to get its address information. Also without this address information (and unique address code) Lifespan won’t allow me to start inputting a new job.

So I am ready to go but can’t. And being a Sunday no one is available at Landmark or Lifespan to tell me when the database will be back on-line to allow me to work!

Surely if you are providing a system that can be accessed 24/7 you should provide support 24/7?

This is going to be a long day (and night if the database only comes back tonight). And if it’s not back until tomorrow expect me to be extra grumpy at work tomorrow!

 

Reliance on the Web

This morning I have been trying to enter some data on a web-based data program that enables me to produce Energy Performance Certificates (EPC’s) for Non Domestic buildings. This is a very time-consuming job and I find evenings and weekends to be a far more efficient time to enter the data (not sure my wife agrees though!)

As part of the process (in fact one of the first jobs) is to enter the address of the property. This has to be done via the Landmark database that has a UPRN (unique property reference number) for every property in the UK. The program I use Lifespan SBEM should link directly to the Landmark database and find my address for me in seconds. Unfortunately today it wont link! I am not sure if the database is down for maintenance or if it’s Lifespans fault. Whichever it is it is a problem – no one is available to report it to as it is a Sunday, so I have had to fudge the job which will require additional work and checking on my part.

The effect of data loss!

I am not happy as you can imagine! It has also set me thinking about how beholden we are to data kept either in the ‘ether’ or on hard drives somewhere. If you sit down and think about it this touches nearly every part of our daily lives;

At work all of our property data is held on a web-based server – as are most property agents details.

All bank details are held on a bank server.

Your details relating to your home, shopping habits, credit details etc – all on other people’s databases.

And that is before you consider what the Government hold about you!

This is not a whinge about personal data and our personal freedom – I accept that most of this data needs to be held about us, my concern is what happens when one small link in the chain fails. It can lead to a domino effect with lots of our data being inaccessible – or even worse lost for ever!

I suppose the moral to this tale is to hold backup data (lots of it) and have a ‘plan B’ in place in the event of a failure.

I am not sure how many of us are actually prepared for this eventuality?

 

‘Real World’ Green Property

The Estates Gazette has this week reported on the approach that British Land have taken in an effort to reduce their carbon footprint, initially on their head office building (York House in London) but eventually across their entire portfolio.

Their approach appears quite ‘basic’ on first inspection. They are aware that their portfolio is ‘what it is’ and that they have to work out savings utilising the current fabric of their buildings. So what have they done and what effect has it had on carbon and more importantly costs?

Well, York House is a 90,000 sq ft building in the centre of London (of which BL occupies 40,000 sq ft, the remainder being let to four other tenants). In total it has 365 occupants, so is a good test of what can be done on a large office building.

In the 12 months to March 2010 BL saved 1,098,995 kWh and therefore emitted 416 tonnes less carbon than in the previous year. This sounds impressive, but it’s the financial saving that also needs considering (and makes more sense to both Landlord and Tenant).

Over the 12 months the following savings were seen;

£51,834 saving in heating and cooling bills – that’s a 32% cut!

£11,000 saving in lighting bills.

And how was this achieved?

Basically a new state of the art energy management system was installed, alterations made to thermostats and lots of bulbs were replaced. The cost – £65,000, just £2000 more than the first years saving! That is a very impressive pay back period!

BL have confirmed that these savings are being passed straight to the tenants, so arguably making the building more attractive to the market and more easily let (although this effect has yet to be seen in reality in the market). The systems installed do need constant monitoring to ensure the maximum savings are returned, but this is a small price to pay for such a saving and is potentially easy via modern IT.

Without doubt this is the type of action that all landlords and managing agents should be looking at for their portfolios. It would appear to me that all sides win, and the carbon footprint of the building is improved (possibly important in the future if EPC’s are linked to rating for example). BL are now going to roll this approach out across its portfolio – good for them (and their tenants).

I know that this type of approach could benefit my organisation. We have 3 offices and I am sure that this aspect of our occupation has not been considered in this way. Perhaps some expenditure on better control of heating, cooling and lighting could show a good level of saving – and not over as long a payback period as currently thought?

At a time when we are all looking to save money (and waiting for the Government to tell us how it is going to save six Billion pounds next year) this approach has to make sense! New buildings have to be ‘green’ to comply with current building regulations – it is the existing stock that needs to be addressed as that makes up the majority of the UK property stock.

 

EPC’s – You chance to comment!

Communities and Local Government (CLG) have released a consultation document entitled ‘Making better use of Energy Performance Certificates’.

As the name suggests this consultation is concerned with a number of measures to help improve the effectiveness of EPCs and to make better use of energy performance data.

To download a copy of the consultation document, please go directly to the CLG website.

http://www.communities.gov.uk/publications/planningandbuilding/epceffectivenessconsult

When the CLG has been pushed on widening EPCs/DECs and compliance at various meetings they have made the point they need to consult, so here is your chance to tell them what you think (of the proposals).

The most relevant chapter to the market as a whole is chapter 5 and I recommend all to read this;

Chapter 5: Energy performance certificate ratings in property advertisements

This poses two main questions as follows;

1. Do you agree that advertisements for the sale or rent of domestic and non-domestic property should include details of the EPC rating?

2. Do you agree that the scheme should be made compulsory by implementing the relevant provision in EPBD2 at an early opportunity?

As a qualified energy assessor I will obviously be replying to this consultation. I have commented before on my belief that the legislation for commercial EPC’s should be the same as residential properties – in other words the EPC should be included on all marketing material. The second question relates to this “bringing in line” with the residential market as quickly as possible.

If the Government is to reach its commitment on reducing CO2 emissions then 80% of this saving will have to come from property. There has therefore to be some control and monitoring of energy efficiency, the EPC is this control and is therefore unlikely to go away! So let’s get to grips with it in the property world and use it.

In the long-term it can only help in driving forwards the agenda for sustainable buildings as well, which also has to be high on our agenda as property professionals.

We have to move with the changes to our market, and not react after the event. We should be a driving force in our industry and not a profession of followers!

 

“Energy Labelling” and Property

A recent visit to Sherwood Energy Village in Ollerton has set me thinking about design and sustainable development. The RICS have also recently published some research from the USA studying the effect of what they term ‘eco-labelling’ on office occupancy rates.

There are a variety of ratings around the world for energy labelling buildings, but the two most well known are BREEAM (BRE Environmental Assessment Method) and LEED (Leadership in Energy and Environmental Design). BREEAM is the European standard, LEED the USA version. Both are fairly similar in nature and are in effect best practice for sustainable design.

Both in principal aim to provide the following:

market recognition for low environmental impact buildings

assurance that best environmental practice is incorporated into a building

inspiration to find innovative solutions that minimise the environmental impact

a benchmark that is higher than regulation

Its implementation attempts to;

use a straightforward scoring system that is transparent, easy to understand and supported by evidence-based research

has a positive influence on the design, construction and management of buildings

sets and maintains a robust technical standard with rigorous quality assurance and certification

Consequently as agents we would look to promote a BREEAM building as more attractive to occupiers due to its lower carbon footprint, lower running costs etc. The question however is – does the market see this as a benefit, and is it shown through occupancy and voids data?

This is not been easy to assess, particularly in a poor market. So the RICS data is interesting (despite it being US based). The data suggests that there is an 8% difference in occupancy for LEED buildings (in their favour). At this time this is not particularly ‘definative’ in my view. It suggests a trend but perhaps no more.

If green issues remain at the forefront of peoples thinking this type of building may well become more popular. But there is a cost factor which will deter developers. Yes a BREEAM building may win awards, but it will cost a lot more to build and may not be as attractive to the market due to certain ‘design’ features. There is another angle as well – the desire of the developers and architects to make a statement, this may have a detrimental effect on the scheme in my opinion.

Sherwood Energy Village demonstrates this I believe;

E Building, Sherwood Energy Village

Sherwood Energy Village had a ‘difficult birth’ being born out of the sudden closure of the Ollerton Pit (even by the standards of the day) and the locals desire to help prevent the death of the town. Initially seen as a bunch of lunatics the town created an Industrial Provident Society to manage the site. Against all the odds they managed to purchase the site from British Coal for £50,000 and then proceeded to fund a £4.2M clean up of the site before agreeing a planning strategy for the development with the local council.

They have through careful management retained overall control of the site and therefore kept speculative developers at arms length. Consequently any development has to follow their design principles and ethos. Buildings are built to a high standard from a sustainability point of view, plus recent business units are achieving BREEAM excellent. But they are generally designed to be practical and not ‘design statements’. All sites are sold on a 125 year ground lease, acceptable to funders but enabling further control to be maintained over the site (for example requiring development within 2 years of site acquisition).

The site now has a diverse collection of occupiers all (with the exception of Tesco) in sustainable buildings offering the users various financial and ethical benefits. Over 1000 jobs have been created in the last 13 years on the site, more than were employed at the pit in its heyday.

photo: Tim Garratt

Contrast this with No.1 Nottingham Science Park. An award winning design with very high environmental credentials (seen as the definitive way forward for science park design in respect of sustainability). But, this is a very striking building, very much an architects view of what we need! It remains to be seen whether occupiers will buy into the architecture. But as a showcase of what can be done with a building (together with the Toyota Building on the same site) this has put Nottingham on the map architecturally for the first time in years. Without doubt No1 needed to be built to show what can be achieved and Blueprint the developers should be applauded for this. It has had a difficult birth into the worst market we have seen for decades, I am sure it will succeed with the fullness of time.

I believe what is needed is a middle course, the practical Ollerton approach with an element of Architectural flair. Hopefully we can move forwards in this manner in the next decade.

 

Comparing CO2 Emissions

Over Christmas the Guardian did a piece on the CO2 emissions from the UK’s public buildings – I commented upon it here. Although a fair point was being made about the need to save energy, they had missed the point about the use of the buildings affecting the energy used.

Today in the Guardian there is a reply to the article by Philip Steadman, he confirms my comments but goes further due to the data that his team at UCL have collected about energy use in all buildings across the UK. They have established that industrial buildings use around 60,000 gigawatt-hours annually (for the buildings only and excluding industrial processes) against some 55,000 gigawatt-hours annually for schools, hospitals and offices put together.

What does this tell us? Not much in my opinion. Until we have a national database of all property and its energy efficiency it is almost impossible to gauge the real cost of the building stock of this country in energy terms. That will take a several years to carry out even with the help of the business community.

However, the Department of Energy and Climate Change is apparently producing a national database that will link floor areas to property use on domestic and non domestic property. The non domestic one is well-developed (no doubt due to the domestic EPC requirement being in place longer). Non domestic data collection has further to go, but this has to be a good idea that will hopefully prove useful in the future to allow a more accurate comparison between individual buildings.

 

EPC’s – Time to take them seriously?

This week I became aware through the RICS (through whom I am accredited as an Energy Assessor) of action that is being taken by Cornwall County Council against commercial agents who are marketing properties without an EPC (an offence liable to a maximum fine of £5000).

Following a ‘desktop survey’, officers from the local authority have compiled a list of 120 commercial properties without a commercial EPC that are being marketed through the local press in the county.

Landlords who do not comply with the rules face a fine of up to £5,000 based on the rateable value of the building, however Trading Standards officers intend to contact landlords and sellers who are marketing without an EPC with a 28-day warning first.

Cornwall Trading Standards officer, John Tutchier, said: “There appears to be a trend for delaying the provision of an EPC until the last possible opportunity or, in some cases, for not providing one at all. Not having an EPC and marketing a property for sale or rent is against regulations and landlords who do so may be served with a penalty charge notice.”

Currently agents have been advising their clients of the need for an EPC when marketing a property. The liability currently rests with the client – not the agent. So advising the client accordingly has been deemed sufficient by most agents.  But the lack of action by Trading Standards against offenders has made clients unwilling to instruct on the preparation of an EPC. Consequently the lack of EPC’s on properties on the market is a common issue.

This action may well be the ‘kick start’ that the EPC market needs. This is a legal requirement after all. And although it is an extra cost for vendors it is not massive by any means as fees have been driven down to low levels in the last 12 months.

So as an assessor I say ‘well done’ to Cornwall County Council Trading Standards. The question is – who will be next?

Time to take the provision of EPC’s seriously?