Under new energy efficiency regulations to be introduced as early as 2015, a fifth of commercial and residential property will be excluded from the rental and lease market.

Current legislation dictates that all buildings with an energy performance certificate (EPC) level F or below cannot be let out after 2018 without significant works carried out in order to increase efficiency.

Today, property and construction consultancy McBains Cooper says the deadline could be brought forward to 2015 as a direct result of Government’s commitment to reduce carbon emissions.

Anthony Coumidis of McBains Cooper explained: “It might be considered an asset, but it may actually be a liability – and sooner than expected; in summary, if a commercial or residential property doesn’t comply, and its owner for whatever reason wants to switch it to being let out after the anticipated deadline, then he can’t. The owner can, however, renew existing leases, but that owner is potentially exposed should tenants decide to move out of an F- or G-rated building after the deadline date.

“We estimate that around one in five buildings fall into the F/G EPC category, including many listed or historical properties. Property owners therefore have only around 1,000 days to raise the efficiency ratings of F/G level buildings, or face them having to stand empty. In some cases, planning permission may be required, which, bearing in mind upgrade designs may need to be drawn up, can mean months of delays before work can actually start.”

Government’s Green Deal, due to launch in October this year, is expected to work towards these requirements. By installing energy efficiency measures under the scheme’s Golden Rule, landlords will be able to increase their building’s EPC rating and therefore the value of the property. The Green Deal measures will be paid for by the tenants through the energy bills.

“But for some commercial properties in particular, the most appropriate and cost-effective means of upgrading efficiency ratings may not fall within the Green Deal criteria. What’s more, some owners and tenants may be uncomfortable with what is essentially a loan secured on their property – and may wish to fund improvement work direct,” concluded Coumidis.