New research shows £10.9 billion of commercial property value in South East at risk following government legislation

New research from Siemens Financial Services (SFS) has laid bare the risk to the value of commercial properties in the South East and beyond in the light of recent government legislation.

Entitled 'Urgent Upgrade', the report outlines how commercial property could become so-called stranded assets due to new energy legislation effective since April 1 this year, which demands that commercial buildings have an EPC (Energy Performance Certificate) rating of at least E to continue to be let.

This equates to £93 billion worth of commercial properties in Great Britain at risk. By region, that includes £10.9 billion worth of commercial properties in the South East and £25.7 billion worth in London.

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It means that without immediate investment, owners of F and G-rated buildings will be left without income and face the possibility of significant fines as well as reputational damage.

This means potentially seriously undermining capital values for buildings owners, landlords and Real Estate Investment Trusts (REITs).

It also means energy efficiency improvements are now a top priority and specialist financiers are now offering packages which use future energy savings to finance building technology upgrades.

Ollie Finkill, business development manager - clean technology at Siemens Financial Services (SFS) said: "For businesses to invest in building conversion projects it has to make financial sense.

"In the context of unlettable properties and undermined commercial value, the business case is a clear and urgent one but future savings (that can be used against the cost of investment) should also be a crucial motivator."

The UK government has a staggered approach to achieve its net zero goals, with plans to raise the threshold to a C rating by 2027 and to a B by 2030 adding further future pressure to buildings owners.

Toby Horne, Siemens infrastructure financing partner, SFS, added: "Working with integrated technology-and-finance providers can make building conversion projects zero-net-cost.

"Given the current urgency to convert, coupled with government plans to increase the EPC threshold in the years to come, buildings management should act now to ensure compliance and capitalise on the potential for both energy and financial savings."

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