Could looming new energy efficiency standards spark a green rental market?
The impending new energy efficiency regulations for UK properties (April 1, 2018) could trigger the emergence of a green rental market, credit rating agency DBRS has claimed.
These new rules will prohibit landlords from granting a tenancy to new or existing tenants if the property has an Energy Performance Certificate (EPC) rating below band ‘E’. It is estimated that as much as 20% of commercial properties in the UK will would fail to meet the new standards.
Commercial landlords that fail to comply with the new legislation could face fines of up to £150,000. As a result, there is a potential for green bonds to enter the market in the mortgage-backed sector, according to credit rating agency DBRS.
Residential mortgage-backed security (RMBS) investors are likely to realise the potential for additional credit risk arising as a result of non-compliance with MEES, the agency claims.