The Energy Performance Certificate (EPC) has been with us now in one form or another for over 5 years. Initially introduced to the residential market and then into the commercial property market it is fair to say they have not been universally popular! But how are they now viewed, and how much impact (if any) have they had on the market?
My personal involvement relates purely to the non domestic market – which arguably has been most resistant to their adoption. Within the residential market EPC’s are now accepted by purchasers and vendors alike, they actually appear to like the information it provides them with. Whether or not it actually affects their decision process is not clear – the market may not be that intelligent yet.
In the commercial property market I think it is fair to say that owners and purchasers have all come to accept that the EPC is now a legal requirement, the number of transactions that occur now without one appears to have dropped to almost zero, and the last-minute EPC ‘just before exchange’ is getting far less common.
However to date there are only 472,962 non domestic properties registered on the Landmark Database for England and Wales as having EPC’s – somewhat short of the total domestic registrations of 10,665,662! And a long way short of the England and Wales total property stock which is in the region of 25 Million homes and 1.8 Million commercial properties (VOA data).
What hasn’t changed sadly (from the point of view of an assessor) is the level of fees – these still don’t reflect the work involved in a non domestic assessment – and I don’t see this changing anytime soon. But lets hope activity will continue to rise.
So we still have a long way to go on adoption, but as can be seen from the residential statistics much is down to the market activity – so with more activity in the commercial market adoption should increase. Time will tell if the EPC actually sees its 10th anniversary, what is clear is that the UK is slowly building a database of energy information – what it does with it is another matter.
Today sees the launch of the Green Deal – you have possible heard of it, but probably don't know the details of what it offers or how it works. The government haven't in my opinion been very forthcoming when it comes to publicising it! So what does it offer and is it worth your time?
Well, on the face of it the scheme is a great idea, providing funding for home improvement that make a property 'greener' – by way of new boilers, better insulation etc – you get the idea. The repayments are handled by your services provider, the idea being that the savings you make on heating are paid for by the cost of your loan – so in effect your bill doesn't drop, but your house is more efficient – but here lies the problem;
The loan can be over a long period – up to 25 years and passes with the property. So if you do a lot of green deal improvements and then a few years down the line sell up, the loan passes to the next owner.
Perhaps even more of a problem is that the loan is not interest free and this can actually make it more expensive that just borrowing the money on tHe high street to do the works!
But the real killer is that the initial survey is not free – costs of between £100 – £150 are quoted, and this is not recoverable if the green deal won't actually work for your property!
People will only do these works if they can see a benefit in their pocket – everything about the way the deal works goes against this – and is possibly why since October when green deal surveys could start to be done only a handful (literally) have been done!
So a great idea, but very badly managed. Cost to the government will be the reason for the charges and interest payments, but I cannot see the Green Deal doing much business until something changes…..
The move away from the ‘good old’ tungsten bulb is now almost complete. Some people have stock piled them in cupboards as they don’t like the much more efficient and longer lasting alternatives – compact fluorescents and LED’s. but generally there does now seem to ba an acceptance that the move away from old style bulbs is the way to go (unless of course you read the Daily Mail!).
And the first versions should be available next year!
As one of the Worlds major economies we are used to hearing the mantra about growing GDP (gross domestic product) in the UK – if it falls it is apparently ‘the end of the world’. But what if there is a ‘better way’?
The tiny country of Bhutan measures prosperity by gauging its citizens’ happiness levels, not GDP.
Since 1971, the country has rejected GDP as the only way to measure progress. In its place, it has championed a new approach to development, which measures prosperity through formal principles of gross national happiness (GNH) and the spiritual, physical, social and environmental health of its citizens and natural environment.
Less than 40 years ago, Bhutan opened its borders for the first time. Since then, it has gained an almost mythical status as a real-life Shangri-La. For the past three decades, this belief – that wellbeing should take preference over material growth – has remained a global oddity. However in the current world which is beset by economic and environmental disasters this approach is beginning to interest the larger world players, and will be discussed in Doha at the UN climate change conference.
Bhutan’s stark warning that the rest of the world is on an environmental and economical suicide path is starting to gain traction. Last year the UN adopted Bhutan’s call for a holistic approach to development, a move endorsed by 68 countries. A UN panel is now considering ways that Bhutan’s GNH model can be replicated across the globe.
Bhutan is also being held up as an example of a developing country that has put environmental conservation and sustainability at the heart of its political agenda. In the last 20 years Bhutan has doubled life expectancy, enrolled almost 100% of its children in primary school and overhauled its infrastructure. At the same time, placing the natural world at the heart of public policy has led to environmental protection being enshrined in the constitution. The country has pledged to remain carbon neutral and to ensure that at least 60% of its landmass will remain under forest cover in perpetuity. It has banned export logging and has even instigated a monthly pedestrian day that bans all private vehicles from its roads.
We all hark back to simpler times at some point in our lives, perhaps this is a further example that some of the ‘old values’ are perhaps even more valid today than they were then?
As some of you who regularly read this blog may be aware, as an energy assessor I was trained by the RICS who are my professional institution. I subsequently lodged all my energy assessments under the RICS accreditation scheme – that is until they gave all their assessors one months notice of the closure of their scheme.
Well that month has now ended and I have transferred to another accreditation scheme, the transfer has been painless, but sadly that had nothing to do with the RICS who have been spectacularly absent throughout the entire episode.
At the outset I had to chase the RICS for confirmation of the scheme closure – not an auspicious start. Since then I have had one notification of a possible new scheme to join (CIBSE) from them and nothing else – no check to see if I had managed to arrange anything – nothing!
On Friday it also transpired that the scheme actually ended at 4pm – not midnight – so part way through the afternoon I found I couldn’t lodge any EPC’s – great! There was a note on the login page – but no one actually would login that way!
However, Lifespan who I use to lodge my assessments were brilliant and helped me out, also my new accreditation body – sterling – were very helpful and efficient. even CIBSE rang to check I was sorted – but not my professional body.
In an age when as Chartered Surveyors we are being asked to comply with more and more rules and regulations by the RICS it’s nice to see that they have our best interests at heart!
I am a Chartered Surveyor – and proud of it. My membership of the RICS allows me to do my job and satisfy my clients that I have the necessary knowledge and qualifications to do it properly. So why does the RICS make it so difficult for me to consider them my ‘friend’ in business?
Let me explain – a few years ago I undertook the RICS accredited Energy Assessors course to qualify as an RICS accredited energy assessor – this would allow me to prepare EPC’s for my firm and clients and then lodge them. The training was quite intensive and not cheap, but I was proud to be accredited by the RICS as they were considered to be one of the better managed schemes – so perhaps of a better quality?
So all looks rosy – until Friday when I gathered (second hand) that the RICS are going to withdraw their accreditation scheme – so I will have to register with another body. This will possibly entail doing further exams – despite being qualified already, and more importantly if I don’t act quickly, might cause a break in me being able to provide the service.
I picked the information up from an RICS forum, from other equally confused assessors. I have subsequently spoken to the RICS by telephone and they have confirmed the news, and told me the letters are in the ‘process of going out’ – have they not heard of email? I have however been told officially by the software provider I use for EPC calculations and lodgment (Lifespan) and have also received an email from an alternative accreditation scheme (Elmhurst Energy) offering a free transfer.
So why if they can all contact me so quickly and efficiently, cant the RICS (who are supposed to look after my interests for me?)
Oh, and the notice that the RICS has given its members? Five weeks (and that is for the ones that have heard officially – I still haven’t). So am I to believe that this decision was only taken a few days ago – I think not!
Now do you see my issue with the RICS?
As an energy assessor I get to inspect a large number of properties, most of which are vacant and looking to be sold or let. Consequently it is in the vendors (or Landlords) interest to ‘make the most’ of the property. Historically this has taken the form of ensuring units are cleared out, kept secure and generally ‘tarted up’ where required. If you were selling your house you would follow a similar regime to assist the sale.
There is however now another major factor that vendors and Landlords now need to consider as part of their marketing preparation, the EPC (or energy performance certificate). All commercial properties now need one if they are to be sold or let, so why don’t people take getting the best rating they can seriously?
This week I have prepared an EPC on a period office building (in Derby), nothing unusual there. But, a high proportion of the bulbs were old style tungstens (the type favoured by Daily Mail readers). As part of my report back to the client I highlighted that changing these all to CFL’s (compact fluorescents) would make a massive difference to the rating which as it stood would be an ‘F’.
This being most important due to the changes due in 2018 which would make this property unmarketable if it remained as an ‘F’. This is something that all Landlords need to consider as part of their property portfolio reviews moving forwards.
On this property the change was quite remarkable – for the cost of around 20 CFL’s (£20?) the rating moved from an ‘F’ to a ‘D’! So as far as this client is concerned the bulb change will be done, the EPC updated to a ‘D’ and the properties long term future secured.
So, in a nutshell, before you get your property assessed give some thought to the simple items you can alter like bulbs and fluorescent tubes – it may save you a lot more than just electricity in the long-term!
This week I am away on my summer vacation in Italy, two weeks of sun and great food. We are in the hills just outside Sienna for the first week in a complex of nine units spread over a hillside with a shared pool – nothing unusual there, but what is interesting is the use of renewables.
Our villa is separate from the rest (which suites us well), but all of the units are linked up to a solar array on the hillside adjacent, I am assuming this feeds into the local network as well although I haven’t been able to confirm this. In addition to this all the villas have solar heating, there are large panels and tanks on each roof – not obvious unless you get at the right angle to see it.
Internally there is a water heater, but it appears to be a high efficiency one which is also linked up to the heating system – there is no air conditioning. So all in all the development appears to be fairly low impact in energy terms. Seeing this makes me realise just how far behind we are in the UK with getting renewables into our housing stock.
Yes we are moving forwards with wind farms and similar things, but our housing stock is old and inefficient, we need to address this sooner than later.
This is a ‘hobby horse’ of mine, as an energy assessor I am regularly the subject of my colleagues jibes about EPC’s and how they are pointless and just get in the way of doing deals. My response has always been ‘wait, they will become relevant. So get them sorted now’
The changes requiring agents to have an EPC before marketing a commercial property have made them consider them more in the past few months – and strangely has made me busier! However there is another bit of legislation due to take effect from April 2018 which will potentially have a far greater impact and is only just being taken note of by the property world;
• The Energy Act 2011 was given Royal Assent on 18 October last year
• From 18 April 2018, it will be unlawful to let any property that fails to meet a minimum energy rating
What is not clear is exactly what the minimum rating will be, it is being speculated that the minimum will be an ‘E’. This would make all ‘F’ and ‘G’ rated properties unlettable!
As a practice we have been advising our clients to be aware of this for a while, but I have recently experienced its effect for the first time from one of the main lenders – a bank taking a charge over a development of six modern units that were built prior to the requirements for EPC’s on new builds. They had no legal responsibility for getting EPC’s on the units – but it was made a condition of the loan that they were provided.
What should you do / how might it affect you?
- This could have very significant implications for landlords, and for occupiers who wish to assign or sublet space.
- Marketability of some properties would become impossible unless they were upgraded to meet the minimum standards. It is estimated that approximately 20% of non-domestic properties could be in the F & G rating brackets.
- Further clarification on the transactional trigger for minimum energy standards is awaited; however the new minimum standards could apply to all lettings and re-lettings, including sub-lettings & assignments.
- Valuations of such properties could be affected if their marketability is diminished.
- Rent reviews for properties in this situation could also be affected.
- Implications for dilapidations assessments would also exist.
Food for thought, perhaps it is time to get your properties assessed so that you can be sure that they have a long term marketability?
Renewables are a great idea – once the method of extracting the energy has been built it is free – whether it is wind, sun or wave power is irrelevant, as long as there is a selection of types to provide general cover. This is the normal argument against renewables – what happens when the sun is not out or it’s not windy – hence the need for a selection of producing sources.
The Germans appear to ‘get this’ and have moved forwards in the quest for a replacement for their nuclear industry that is to be wound down following the Japanese disaster.
German solar power plants produced a world record 22 gigawatts of electricity – equal to 20 nuclear power stations at full capacity over a mid day period earlier this month. This is in response to Germany’s decision to abandon nuclear power after the Fukushima nuclear disaster last year, closing eight plants immediately and shutting down the remaining nine by 2022. They will be replaced by renewable energy sources such as wind, solar and bio-mass (a sensible spread).
The 22 gigawatts of solar power fed into the national grid met nearly 50% of the nation’s midday electricity needs, yes it was only for a short period, but it shows what can be achieved. Never before anywhere has a country produced as much photovoltaic electricity. The record-breaking amount of solar power shows one of the world’s leading industrial nations was able to meet a third of its electricity needs on a work day, Friday, and nearly half on Saturday when factories and offices were closed.
Government-mandated support for renewables has helped Germany became a world leader in renewable energy and the country gets about 20 percent of its overall annual electricity from those sources. Germany has nearly as much installed solar power generation capacity as the rest of the world combined and gets about four percent of its overall annual electricity needs from the sun alone. It aims to cut its greenhouse gas emissions by 40% from 1990 levels by 2020.
All this at a time when our Government appear hell-bent on crippling our solar industry just as it was getting into its stride – time for a swift U-turn?