Energy Performance Certificates:
ALL Commercial building above 540 sqft (50 sqm)
To be sold or let require an Energy Performance Certificate and it will be the responsibility of the vendor / landlord to obtain. There will be exceptions such as those buildings with a low energy demand such as an unheated warehouse and off plan sales. We would be pleased to put clients in touch with and Accredited Energy Assessor, independent of Core Commercial, to obtain a quotation.
Landlords may not grant a tenancy to new or existing tenants if their property has an EPC rating of band F or G . from 1 April 2023, landlords must not continue letting a property which is already let if that property has an EPC rating of band F or G.
In both cases this is referred to in this guidance as the prohibition on letting sub-standard property. Where a landlord wishes to continue letting property which is currently sub-standard, they will first need to ensure that energy efficiency improvements are made which raise the rating to a minimum of E. In certain, limited, circumstances landlords may be able to claim an exemption from this prohibition on letting sub-standard property, this includes situations where all improvements which can be made have been made, and the property remains below an E.
Hitherto we have suggested that clients just obtain a quotation and only instruct the surveyor if the government Trading Standard Officers start to take action. Matters are however changing.
- Firstly, we are finding that incoming tenant or purchaser solicitors are demanding EPC's and clearly it is not in anyone's interest to hold up a potential deal for a relatively small sum.
- In essence you need an EPC before you start marketing and there are financial penalties.
EPCs are not required before the construction of a building is completed.
You don’t need an EPC if you can demonstrate that the building is any of these:
- Listed or officially protected and the minimum energy performance requirements would unacceptably alter it
- A temporary building only going to be used for 2 years or less
- Used as a place of worship or for other religious activities
- An industrial site, workshop or non-residential agricultural building that doesn’t use much energy
- A detached building with a total floor space under 50 square metres
- Due to be demolished by the seller or landlord and they have all the relevant planning and conservation consents
Vacant buildings and demolition:
A building is also exempt if all of the following are true - it’s due to be sold or rented out with vacant possession it’s suitable for demolition and the site could be redeveloped the buyer or tenant has applied for planning permission to demolish it.
If you have a building (with a roof and walls) that uses energy to condition the indoor climate (i.e. has heating, air conditioning or mechanical ventilation) then you will require an EPC.
What if you have an unheated warehouse that has a heated office?
The entire property will require an EPC. However the heated office will be the crux of the calculation whereas the EPC covers the entire property, including unheated warehouse, because such matters as lighting need to be assessed.
It is unlawful for a property banded F or G to be let without implementing cost-effective energy efficiency improvements
Minimum Energy Efficiency Standards were passed into law and on 1st April 2023 ALL existing leases must comply.
Landlords will be breaking the law if they let inefficient buildings - both domestic and commercial. There are hefty penalty fines for non-compliance ranging from £5,000 to £150,000.
Properties which are currently exempt from EPC legislation remain out of the loop and buildings which are being sold are also exempt - the legislation applies to premises being leased or let which includes sub-lets, multi-lets and FRI leases. Properties with existing EPCs must also comply.
Leases which are shorter than 6 months or longer than 99 years are exempt. Other exemptions include where a tenant refuses consent for energy efficiency works or where such works would have a negative impact on capital or rental value. Exemptions expire after 5 years and are not transferable to a new owner upon sale.
As a seller or landlord you are responsible for ensuring there is an EPC available for the accommodation being sold or let even if an agent or another service organisation is acting on your behalf.
What happens if I do not have an Energy Performance Certificate?
The penalty for failing to make an EPC available to any prospective buyer or tenant when selling or letting non-dwellings is fixed, in most cases, at 12.5% of the rateable value of the building, subject to a minimum penalty of £500 and a maximum of £5,000.
There is a default penalty of £750 where the formula cannot be applied. A formula is used as the costs of producing an EPC for non dwellings are expected to vary according to the size, complexity and use of the building. The EPC will still be required.
