Going green is a key initiative for the UK Government, with many policies being put in place both now and in the future with the aim to build back a greener Britain.
From a property perspective, there is a pivotal change regarding Energy Performance Certificates (EPCs) on the horizon that will have a particularly big impact on Landlords of commercial property as well as the property market as a whole.
The purpose of an EPC is to detail how energy efficient a building is and give it a rating from A (very efficient) to G (inefficient). The data provided by the EPC and associated recommendation report tells you how costly it will be to heat and light a property and what its carbon dioxide emissions are likely to be. It also includes information on what the rating could be if you made the recommended improvements and highlights cost-effective ways to achieve a better energy emission rating for your property.
At present, and as originally implemented in April 2018, there is a requirement for Landlords granting a new lease or a renewal lease of a commercial property to hold an EPC with an E rating or above – anything else is considered ‘sub-standard.’ As of 1st April 2023, it will be a legal requirement for all commercial rented properties where a new lease or an existing lease is in place to have an EPC rating of at least E or above.
It is the Landlord’s responsibility to make sure that their property has an EPC in place and from 1st April 2023 property owners must not continue to let properties that have an EPC rating of F or G.
Getting an EPC carried out requires a survey to be conducted by a Domestic Energy Assessor. The inspection usually takes no longer than an hour and can cost as little as £150. Once received, it is the responsibility of the Landlord, as owner of the property, to read through the recommendations for improving the property’s energy efficiency and ensure (if renting the property) that the current rating is an E or above.
Non-compliance with the incoming regulations would not only have an impact on the legality of the tenancy but could also give rise to further cost implications and penalties which could put Landlords at risk of fines up to £150,000. In certain circumstances – including those where the property in question is listed, protected or used for religious purposes – exemptions to the EPC rules and regulations may apply.
The drive to improve the energy efficiency of properties does not stop here. Further regulations are expected in 2025 whereby the Government will require all new tenancies to have an EPC rating of C and above, although this update will not take effect on existing tenancies until 2028.
Our advice to all Landlords at this time is to “get green” and get your EPCs in place as soon as possible so as to avoid any potential issues, fines and problems with letting your commercial properties in the future. For further information or guidance on the process of securing an EPC – or for any questions concerning your existing EPC or exemptions surrounding EPCs – please contact Charlotte Excell or telephone on 0191 384 2441.
