The Impact of Energy Performance Certificates on the Rental and Capital Values of Commercial Property

The focus of this study is on the effect of EPC rating on the capital values, rental values and equivalent yields of a sample of UK commercial property assets. As part of a wider objective to reduce greenhouse gas emissions, one of the policy aims of energy labelling of buildings is to provide information to market participants about assetsí energy performance in order to influence their demand. In turn, it is implied that demand shifts will have effects on prices, supply and, ultimately, on greenhouse gas emissions. Since they constitute the terms on which products are exchanged, prices are a fundamental element of markets and, whilst not always perfect, price signals are central to the operation of markets. Research on price effects is, therefore, central to identifying the effectiveness of this type of policy intervention. The study is based upon 708 commercial property assets held in the IPD UK Universe drawn from across all PAS segments. Hedonic regression procedures are used to estimated the determinants of commercial property assetsí yields, capital and rental values.