New data shows just how much of an effect MEES regulations are having and why this is no time to meddle with environmental policy.
Given the recent release of the second quarter's dataset for commercial EPCs and environmental issues taking centre stage in political football we thought it prescient to look at the numbers and illustrate our findings. Put simply, London's commercial landlords seem to have taken on board their responsibilities and are rapidly gearing their properties to meet the MEES legislation outlined for the rest of the decade.
Commercial property has long inhabited the safer, risk-averse end of the investment world and tends to attract 'smart' money - that is to say money that doesn't want to be lost. Given the prospect of a marketplace polarised between highly-rated premium space and unlettable slum offices the landlords have firmly decided which side of the fence they want to be on. As the chart above shows some 75% of all EPCs assessed in the first six months of the year will happily sail through the minimum 'C' rating due to come into force in 2027 whilst around a third will be fine through to the end of the decade when the minimum should rise to a 'B'.
The clear trend towards improving scores is welcome news as is the nigh-on extinction of the dreaded (and now illegal to let) 'F' and 'G' ratings in recent years though this is thanks more to the blossoming retrofit industry, increased energy costs and a general acknowledgment that its the right thing to do than any kind of coordinated effort by local authorities to enforce the fines associated with MEES legislation.
The chart above clearly shows both the Covid slump in demand in the second quarter of 2020 as well as the rush for certification to meet this April's minimum 'E' step-change but more broadly it shows the momentum gathering pace - the property industry has decisively taken MEES to heart and in a built environment clamouring for the likes of BREEAM, NABERS, RESET and SKA recognition the humble EPC is an excellent, accessible and workable benchmark.
A self-regulating marketplace was once the dream of conservatism and this is precisely what can be seen happening in real time in London, Mr Sunak et al should strongly consider this before tinkering. In any event the hivemind of property is by nature long-term in outlook and they can perhaps see past what will hopefully be the end of the affair with legacy energy sources. The London Commercial EPC has a bright future.