My colleague Ed Gabbitas recently wrote a blog post titled ‘Why MEES is Changing Behaviour Two Years Ahead of the Compliance Date’. In that post, Ed highlighted some of the challenges around the accuracy and variable quality of some EPCs as well as some broader implications for the sector. In light of the potential adverse impact that MEES could have on some key value drivers, it is imperative that property owners have a clear fund or portfolio view of their EPC risks.
The obvious starting point is to understand where the gaps are. Fortunately, many organisations have started this process already by looking at the extent of EPCs most at risk across their funds / portfolios. A prerequisite to carrying out this analysis is having a single, central database that stores all of the key information in a consistent format.
Those companies that have participated in GRESB will know well that to be able to easily answer the questions relating to extent of portfolio coverage relies on all the key parameters such as EPC scores and an accurate record of associated floor area covered being stored in a consistent format to easily get an aggregated view. If this is stored in a multitude of tenancy schedule spreadsheets it can be an extremely time-consuming process in ensuring that the fund picture is accurate. For voluntary reporting such as GRESB, the effect of getting it wrong might be a dent in scores. However, in the context of MEES, the risks are potentially much more significant – i.e. the inability to let space and therefore negatively impact on income streams.
This is something that we have been able to help a number of clients with through the use of SIERA – our proprietary sustainability management software – to reduce manual intervention and improve the efficiency of storing EPC information in a systematic manner so that information is not overlooked.
Assuming that you have all your EPC information in one place the next step is to prioritise actions for managing the potential risks. This may include identifying which EPCs should be re-modelled for example or identifying particular units or properties for improvement to ensure they are MEES compliant. Regardless of what specific actions are taken, an efficient means of profiling EPCs will help make the task easier.
In the case of one of our clients we profiled the assets of a fund to identify the lettable space most at risk of MEES; the units in the example below represented around 69% of rental income and 51% of total lettable area at a particular asset, which ‘could’ have been un-lettable from April 2018 unless action was taken. We carried out an extensive EPC re-modelling exercise to produce new EPCs.
The before and after scenarios are markedly different, showing a really good result. This example is just one improvement case study amongst a fund of where we had profiled many EPCs using the powerful visualisation tools in SIERA. For example with SIERA’s EPC profiling module, you can edit key visualisations of EPCs against ERV and lease expiry to dial in on particular sets of assets/units and create reports. Both our consultants and clients have benefitted massively from the efficiency of being able to very easily profile against key parameters to customise analyses to inform decision making.
Simplified sample EPC Profile Analysis from SIERA:
To speak to our experts about MEES, SIERA, or any other topics, please don’t hesitate to get in touch.
- GRESB Data Automation: Ensuring Seamless Does Not Result in Senseless
- SIERA Sustainability Software: 5 Key Features & Benefits [Infographic]
- Why MEES is Changing Behaviour Two Years Ahead of the Compliance Date
- SIERA Automates GRESB Reporting for Second Year Running
- Property Firms Vulnerable to MEES Regulations
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