November 2008 edition of the LandlordZONE Newsletter.
Energy Performance Certificate Review
Welcome to the November 2008 Issue,
I don’t need to tell you things are bad—the 1.5% rate cut says it all and although the feeling is that the banking situation is solved, this cannot be taken for granted.
The banks & building societies are not out of the woods yet, and the overspill to other industries and financial institutions is only just beginning.
The question we must ask now is not how much more pain a government devoid of reserves and totally reliant on borrowing can take—it’s how the knock on effects will hit us and the economy as a whole.
With house prices set to fall further, and inflation heading to zero, and perhaps below, interest rates could fall to 2% or less in the coming months.
Fortunately for landlords the rental market has held up very well, though increasingly unsold houses are adding to the supply, with the danger that rents will be pushed down.
On the commercial scene, increasing business failures will lead to more voids, and it absolutely beggars belief that a government should impose full empty rating charges at a time like this—when these properties, if vacant, will be very hard to re-let.
The policy is already resulting in landlords and developers demolishing perfectly good buildings, moth-balling developments and in extremis—going bankrupt.
Astute investors should be planning their recovery strategy now, looking to allocate their assets sensibly and safely in the meantime while looking to take advantage of opportunities in the bounce back when it comes.
Something investor landlords would do well to factor in for the future is the energy situation and environmental measures: increasing problems with oil and gas supplies and higher prices will inevitably lead to scarcity and possible power shortages in the UK.
Alternative energy sources such as wind farms will not make up for this and improved technologies such as clean coal and nuclear have very long lead times.
Increasingly landlords will be asked to invest in energy saving measures and meet demanding new standards for energy efficiency.
On 1 December the Climate Change Bill becomes law with serious emission reduction targets—80% by 2050.
It is being suggested that all new commercial building should be zero carbon by 2019—a serious challenge.
This brings us to this month’s topic—Energy Performance Certificates. It doesn’t take a genius to work out how these will fit into the government’s and EU strategy on emissions and how taxation will be used as both a carrot and a stick on gas-guzzling properties and landlords, just as they do with vehicles.
This month’s Topic – EPC Review
The Energy Performance Certificate (EPC) is now a legal requirement for commercial and domestic properties—prior to selling or renting.
It’s early days yet as the requirement for domestic rentals has been in force all-but two months, but landlords are slowly coming to terms with this.
As two environment related bills just completed their passage through Parliament—The Energy Bill and the Climate Change Bill—both of which will present significant changes and challenges to landlords—we review the initial impact of EPCs and the new environmental challenges.
The heating and air conditioning of buildings are by far the most thermally intensive uses of energy in the UK—much more so than with vehicles.
This means that property developers and owners will be targeted in the near future.
Developers will be expected to produce carbon neutral houses by 2016 and commercial buildings by 2019 – compulsory for new builds.
These new measures and their energy tax implications will in turn put pressure on landlords with existing properties to improve their building’s energy efficiency, if they are not to lose out when competing with new-build properties for tenants.
These new laws will give a clear legislative framework for the future of estate management. All-party agreement means that their main provisions are here to stay; they can be relied no not to change fundamentally.
So it’s well worth while studying these requirements now in the knowledge they can form the basis of your future planning. Tom Entwistle.
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