All property owners in the not too distant future will be asked the question: how green is your property? Edward Jonesreports

Historically, property owners and occupiers have paid little attention to the energy efficiency of their properties. This is all about to change.

The European Union's Energy Performance of Buildings Directive became law in the EU on January 4th, 2003. It will become UK law in stages but will be fully implemented in the UK by the (extended) deadline of January 2009. (The EU Energy Performance of Buildings Directive was adopted in 2002 and came into force on January 1st this year. However, under transitional arrangements made by the Minister for the Environment Dick Roche, it will not apply to all new housing built in Ireland until 2009).

The directive has one clear objective: "To promote the improvement of the energy performance of buildings within the Community." It requires buildings to comply with stated energy performance standards and provides for the introduction of energy performance certificates.

In addition, it lays down minimum requirements for energy performance and sets out a methodology for calculating such performance.

The snowballing implications could be substantial:

Buyers and tenants will request sight of energy performance certificates as part of the normal conveyancing process.

Energy efficient buildings may attract higher purchase prices and rents, due to the saving that buyers and tenants will make through lower utility bills and service charge payments.

Equally, potential buyers and tenants may expect a reduced purchase price or rent in relation to buildings which have poor energy efficiency ratings

Lenders may be willing to lend on more favourable terms in respect of "greener" buildings, particularly if they attract higher purchase prices or rent

Energy performance certificates will have to be produced upon the construction, sale or letting of any property (subject to a small number of exceptions)

Buildings will have to undergo an initial audit for the certificate which will expire 10 years from the date of issue. Landlords may wish to pass this cost on to tenants

The obligation itself to comply with the directive and maintain energy efficiency may also be passed on to tenants by landlords

The public will be able to see whether a company is using its buildings in an energy efficient way. Companies will therefore increasingly become the subject of public scrutiny

Since energy performance certificates will include references to values and benchmarks, sellers, tenants and the public at large will be able to carry out like-for-like comparisons with ease.

The ramifications of the directive are therefore potentially huge. However, they will be dependent upon how receptive the property market will be towards the "spirit" of the Directive. For example, will buyers and investors favour "greener" properties? If so, will lenders be more willing to lend in relation to "cleaner" properties?

These questions are all the subject of speculation. What is certain, however, is that, going forward, the buzz-word of "energy efficiency" will need to be within the conscience of both sellers and buyers. All property owners will be asked the question: how green is your property?

Edward Jones is a lawyer at Manches LLP, the London specialist property lawyers