York shop landlords face bill of up to £180m for energy upgrades

Government energy efficiency rules already mean nearly a quarter of York shops ‘technically’ shouldn’t be let or rented out - a figure set to be almost all by the end of the decade - unless they are upgraded.

The warning comes from property experts Savills, who estimate a national bill of £55 billion-£90 billion, with £10 billion in London alone.

Similarly, BNP Paribas Real Estate has also warned the office market is set for a downturn as government legislation forces similar improvements there.

This month, government Net Zero rules meant commercial properties with an Energy Performance Certificates (EPC) rated E or below can no longer be let out. By 2027 a minimum C rating is set to be mandated, rising to B in 2030.

Savills retail analyst Tom Whittington says the rules, however well-intentioned, will create “a cliff edge” as it takes the property market by surprise and landlords face a potential bill of ‘thousands’ per building.

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Tom told the Press about 24 per cent of retail properties within York’s city walls ‘technically’ cannot be leased as the rules stand today. And unless they are upgraded, this will rise to ‘99 per cent’ by 2030.

York, he says, has fragmented ownership of its buildings, coupled with many older buildings whose EPC ratings are ‘poor’.

Though the government moves are ‘largely sensible’, Tom says it hasn’t thought through its impact, even if there is the caveat “where viable”.

“There’s not even enough engineers and construction staff to improve the properties,” he said.

“Individual units owned by small landlords, where will they find the money or get the knowledge from?”

Technically, this means much of the high street might have to close, though realistically, he doubts it will happen.

The Labour Party is devising a scheme to help smaller premises and he expects the government will have to respond likewise.

It all comes as city centres already face challenges, with them repurposing shops into student flats, medical centres and museums.

“There’s a limit to how you can improve historic buildings,” he added.

“How is it possible to become Net Zero when you have so many historic buildings? York is going to need even more help from central government.”

City of York Council told the Press that non-domestic properties are responsible for 30 per cent of locally derived emissions.

Within York 145 non-domestic buildings have an EPC rating and all are currently above E. Some 36 per cent or 52 properties fall below an EPC C rating.

The council says it has no estimates as to what it believes it will cost to upgrade the city’s commercial properties to keep them legal. But a council report in December said the city would need to spend almost £4 billion on its homes and vehicles alone, if it was to meet its aim to be Net Zero by 2030.

It added support for businesses would be available through the UK Shared Prosperity Fund. The York and North Yorkshire Growth Hub has also produced a Net Zero Business Toolkit to support businesses transition towards Net Zero.