Is your commercial property EPC ready?
Regulations will come into force by 2018 which will make it unlawful for properties to be let in England and Wales which do not meet a prescribed minimum energy performance standard (MEPS).
For those who lease or rent a property the building will need at least an “E” rating on its EPC before the contract is signed and agreed from 1st April 2018. Similarly all privately rented commercial properties will need the same rating by 1st April 2023 before a contract is agreed and signed. All properties currently leased will also need to meet this standard.
Whilst the new regulations will apply to all rental properties, which already require an EPC, there are a few exemptions:
- Third party consents exemptions: landlords will have to demonstrate lack of required consent e.g. from tenants, from superior landlords, or refusal of planning/listed permission;
- Cost-effectiveness exemption: landlords will have to demonstrate both that there is no Green Deal available for relevant improvement works; and that the works would not pay for themselves over 7 years, based on energy bill savings;
- Devaluation exemption: landlords will have to demonstrate that the relevant improvement works would reduce the market value of the property by over 5%.
The penalty rates for renting out a non-compliant property are based on the rental period:
- Less than 3 month: the greater part of £5,000 and 10% of the rateable value of the property.
- 3 months or more: the greater part of £10,000 and 20% of the rateable value of the property, with a maximum penalty of £150,000 and the breach will be publicised.
Landlords have six months to comply with the legislation when:
- The tenancy is granted by operation of law such as the date of a new lease;
- A new landlord acquires the property.
A landlord may also be able to recover the costs of work required through a dilapidation claim.
Further information concerning EPCs for commercial properties can be found on the Government’s website: