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Building a Green Room

Posted on: 02/05/2018

Due to the contribution it makes to carbon emissions the real estate sector is in the forefront of the shift to building “green” buildings. This has been driven by a mix of public sentiment and awareness, legislative pressure and technological advances.

From April 2018 the Minimum Energy Efficiency Standard (MEES) for Commercial Property has been introduced, an encouraging initiative to drive investment into energy efficient technologies in existing property as well as new builds. Commercial property landlords must not renew existing leases unless they have minimum Energy Performance Criteria (EPC) of E, forcing them to invest in making property portfolios more energy efficient whilst reducing carbon emissions.

Whilst new buildings must adhere to building regulations and in addition to this there are certifications such as BREEAM, historically there has been no standard to monitor existing buildings.

This legal requirement to upgrade inefficient existing properties is a game changer for sustainability performance of real estate in the UK.

Landlords may be reluctant to invest in energy efficiency improvements, and it is important to stay on top of what incentives there are available to ease the capital investment burden.

Enhanced Capital Allowances are an important form of tax relief available on qualifying assets installed in any commercial property. If new technology such as lighting, heating/cooling is installed that qualifies for Enhanced Capital Allowances, 100% of the costs can be deducted from taxable profits. There is even a tax credit available for loss making companies of 19% of the cost of the qualifying asset. A review of capital investments should be undertaken by a specialist to ensure a maximising of this important relief, easing the investment burden whilst improving the building and reducing the impact it has on our planet.

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