Surviving the commercial sector slump

Published by Lucy Blackwell for Stroma in Communities and also in Central Government, Environment, Local Government

As the commercial property sector slumps under the weight of the recession, environmental obligations may seem merely to increase the burden. Stroma suggests that, even though it may be tempting to do the minimum and keep costs down, it is worth looking at the improvement of energy efficiency as a long-term investment.

These are undoubtedly challenging times for the commercial sector. The recession has led to a decrease in demand for commercial property, causing capital values to fall rapidly. Given this negative outlook, compliance with environmental legislation may feel like an unwanted addition to an already-difficult situation.

The Carbon Reduction Commitment’s (CRC) aim to cut carbon emissions across Europe by 20% will inevitably increase pressure on businesses to improve energy efficiency. Thus the UK commercial and public property sector, responsible for 15% of the country’s overall carbon emissions, is a likely target for improvement via more stringent legislation.

An Energy Performance Certificate (EPC) is now required upon the sale or rental of any commercial building. The certificate is accompanied by an Advisory Report which outlines cost-effective measure for improving the rating achieved. Worryingly, a recent survey carried out by Building and CIBSE on property professionals and energy assessors revealed that only 21% seek costing for the implementation of these measures. At present, regulations state only that the rating of the building is determined, not that a specific level is achieved. Clearly, until legislation stipulates otherwise, the recommendations suggested in the report will merely represent unnecessary and unwanted expenditure for the majority.

Stroma maintains that energy efficiency improvements should be viewed, not as an unnecessary expense, but as a shrewd investment. Although it may seem, given the current financial climate, that expenditure on anything other than the minimum required for compliance is a needless extravagance, those investing now will reap the rewards later.

With 79% ignoring the opportunity to improve the energy performance of their building, the government will surely have to introduce more stringent legislation for meeting targets. Soon, having an EPC will not be sufficient; people will be obliged to improve that rating and it would be wise to be ready.

At the moment, failure to obtain an EPC when required can result in fines of up to £5000. Should the government decide to tighten legislation and impose improvements, fines may be introduced for those who ignore their Advisory Report. Furthermore, increased taxes for inefficient buildings are imminent, yet another reason to invest in energy-saving measures now.

With companies reluctant to sell for lower collateral gain in the current climate, clearly the main focus should be making property as energy efficient as possible through redevelopment to reduce running costs and avoid being hit by pending taxes. Taking steps to improve energy performance in the present can save money in the future. For instance, installing low-zero carbon systems or carrying out building fabric improvements can immediately improve the EPC rating of a property and, in the long term, deliver substantial savings by continuously reducing energy bills.

Furthermore, once the market has recovered, energy efficient property, which is bound to be more attractive to a potential occupant with its promise of lower energy bills, will surely benefit from an increase in capital value. Thus, making buildings environmentally friendly should be viewed not as a financial burden but as a lucrative exercise.

Part of the multi-faceted Stroma group, Stroma Technology provides long-term management of energy assessment portfolios. Services range from guidance on legislation, policy, funding and potential savings to the delivery of energy assessments and the implementation of the building improvement strategies required to secure better ratings.

For further information, please visit www.stroma.com or call 0845 621 11 11.

All enquiries:

Stroma Technology
Pioneer Way
Castleford
WF10 5QU

T: 0845 621 11 11
F: 0845 621 11 12
E: epc@stroma.com
W: www.stroma.com

Notes

1. Stroma Technology forms part of the Stroma group, a multi-disciplinary organisation specialising in all aspects of building sustainability and compliance.

2. The multi-disciplinary organisation comprises: Stroma Accreditation, Stroma Contracting, Stroma Design, Stroma LZC and Stroma Technology.

3. Stroma Technology – a leading authority in air-tightness and acoustic compliance - provides the testing, calculations and consultancy required for compliance with Building Regulation Parts E and L, as well as all forms of energy assessment.

4. Stroma LZC is a specialist supplier of high efficiency, low-zero carbon products.