Net zero rules to burden high street with ‘£90bn upgrade bill’

The UK’s high streets are facing a £90 billion bill for upgrades as net zero rules is forcing businesses to upgrade more than nine out of ten of Britain’s shops, states a recent report.

According to estate agent Savills, new energy standards will make 91 per cent of all retail space including high street stores and shopping centres across UK city centres unlettable by 2030 without urgent and costly action. According to Savills, it will cost between £55bn and £90bn to upgrade retail stock across Britain, with around £10bn needed in London alone.

The government reportedly is set to ban commercial properties from being rented out unless they are assessed as having a minimum energy performance rating of C by 2027, and B three years later.

Experts are warning that as a result of this rule, swathes of buildings will be unable to meet this requirement without major improvement work with Victorian town and city centre buildings are likely to be in need of expensive insulation to reach the target.

“It’s a disaster waiting to happen. There’s not enough money or enough time,” The Telegraph quoted Tom Whittington, commercial research director at Savills, as saying.

“The Government does not have a real handle of the significance of forcing through these regulations. What you can’t do is have a deadline in 2030 that is unviable and leaves you unable to lease around 80 per cent of shops nationally.”

Retail analyst Mark Faithfull has stated that this is the last thing that either retailers or landlords need, especially as they are likely to hit older stores in less affluent locations hardest.

“The risk is that some properties become what the commercial real estate industry calls ‘stranded assets’, unable to be let as they are but also unable to achieve high enough rents to make investment worthwhile.

“High streets with high vacancies and those in lower property value areas, especially in the North of England, are most likely to fit into those categories, heaping yet more misery on blighted high streets,” The Telegraph quoted Faithfull as saying.

The majority of high street stores across the UK are not owned by major landlords. While landlords with big portfolios may have the capacity to upgrade their space, many smaller players are likely to struggle.

Moreover, the implementation of the new laws could result in landlords trying to sell their properties to escape paying unaffordable prices for renovations.