Commercial property owners urged to check EPC rating

Published on: 17th April 2018

David Fairley, partner in our building consultancy team and accredited non-domestic energy assessor, considers the potential impact for commercial landlords and possible ways forward in improving the energy performance of their buildings.

Due to the new minimum energy standard, as of 1 April 2018 landlords will not be able to let commercial premises or renew leases if the EPC rating is lower than an E.

Whilst in certain circumstances Commercial property owners in England and Wales will have six months after the lease is granted to ensure compliance and seek to improve the rating, properties which have a rating below an E should be re-assessed now to ensure that any works of compliance can be undertaking as quickly and cost effectively as possible, to mitigate any impact going forward.

David commented, “Some estimates suggest that over 50% of EPCs completed in the early years are incorrect. Over the last few years, we have come across a number of inaccurate EPCs, particularly those carried out between 2008 and 2011. With EPC’s needing to be renewed every ten years, or at the point of the next leasing event, some landlords might be in for a surprise from 2018.

“Checking the EPC rating and understanding the cost and benefit of improvement measures may be worthwhile to prevent possible negative impacts on property values.

“It has been a requirement for all qualifying commercial buildings to have a valid Energy Performance Certificate (EPC) prior to letting or sale, for nearly a decade now, however to date there has been little negative impact of owning a property with a poor EPC rating. It will be interesting to see how the regulations affect the market over the next 12 months and how they are enforced but we advise affected landlords to register exemptions ahead of the April 2018 deadline.”

According to the regulations non-compliance of the new standards may result in a minimum fine of £5000and a maximum of £50,000, with the figure rising to 20% of the rateable value. If, the property still fails to meet MEES standards after three months of rental.

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Building Surveying

Our building surveying team will give you a detailed understanding of the condition of the property you are planning to buy, or rent, or already own.

Read More....

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Our building surveying team will give you a detailed understanding of the condition of the property you are planning to buy, or rent, or already own.

[fulltext] =>

We provide several different types of building surveys, (each of which can be tailored to suit your requirements) including:

  • Pre-acquisition surveys – an analysis and quantification of potential risks to the building you are about to purchase or rent
  • Technical due diligence – a detailed technical analysis of the property you about to purchase or rent, currently own or rent, including full ananlysis of any related legal, statutory and construction documents;
  • Pre-divestment surveys – an analysis of the existing building you are about to dispose of, which may be transferred to any purchaser that acts to speed up your property sale

 

When looking for a new property, a building survey will ensure you know of any defects to the building before entering into a contract and the costs of remedying any disrepair.

Working with us also allows you to plan ahead, taking into account any extra costs that may be require allocating to satisfy any key defects, repairing liabilities, legal or regulatory obligations and give you long term knowledge on the costs of the property’s maintenance during your ownership.

To find out which survey best suits you and your property, please get in touch.

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2018 EPC Minimum Standards Regulations

The Energy Act 2011 commits the government to bring into force by 1 April 2018 regulations prohibiting the letting of properties in England and Wales that do not meet the minimum energy performance standard (MEPS).  The proposed changes would make it unlawful for you to let residential and commercial properties with an EPC rating lower than ‘E’.

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The Energy Act 2011 commits the government to bring into force by 1 April 2018 regulations prohibiting the letting of properties in England and Wales that do not meet the minimum energy performance standard (MEPS).  The proposed changes would make it unlawful for you to let residential and commercial properties with an EPC rating lower than ‘E’.

[fulltext] =>

What does this mean to me?

Properties that fall below an EPC rating of E would become impossible to market unless upgraded to meet the minimum standards.  This may lead to valuations, rent reviews and dilapidation assessments becoming negatively affected with a significant reduction in the property value.

The regulations will apply with three possible options.

1. Only new leases need to comply with the minimum EPC rating of E by 1st April 2018;
2. All leases will be affected from the 1st April 2018; or
3. A combination of the two – meaning the regulations will apply to all new leases from the 1st April 2018 with a long stop date of 2023 for all existing leases.

Will it affect all landlords?

The government are proposing a handful of instances where landlords may be exempt from the regulations. 
- If the energy efficiency improvements which are proposed, would have a negative impact on property value.
- If third party consent is denied from tenant, leader, planning authority or a higher landlord.
- If all improvements that are possible to be undertaken at no upfront cost to the landlord still creates an EPC rating below the minimum requirements.

What can we do for you?

We recommend that you start taking action now rather than waiting for the government to publish the specific details and accordingly we can assist you in the following ways:
- Complete a full review of your property portfolio and assess the properties which currently have an EPC’s
- Identify those properties that do not meet the proposed minimum EPC rating
- Establish the cause of the poor rating
- Identify what recommendations can be made to improve the EPC rating
- Assess the lease to identify where the responsibility lies
- Provide an assessment of the impact on maintenance life cycle costing
- Assess those works that would be recoverable by way of enhanced capital allowances including those me through the Governments Green Deal initiative
- Procure and manage all necessary improvement
- Provide energy performance reports and ratings for statutory compliance and marketing purposes
- Provide advice on the appropriate marketing of your properties.

Contact Us

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New guidance published for minimum energy efficiency standards

The government has recently published guidance for landlords on new regulations that will prohibit the letting of buildings that fail to meet minimum energy efficiency standards. The Minimum Energy Efficiency Standards (MEES) come into force in April next year and mean that all properties that fall below an EPC rating of E will become impossible to market unless upgraded to meet the minimum standards. With just over a year until the rules are introduced, the Department of Business, Energy and Industrial Strategy (BEIS) has clarified further how the regulations will be implemented.

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The government has recently published guidance for landlords on new regulations that will prohibit the letting of buildings that fail to meet minimum energy efficiency standards.

The Minimum Energy Efficiency Standards (MEES) come into force in April next year and mean that all properties that fall below an EPC rating of E will become impossible to market unless upgraded to meet the minimum standards.

With just over a year until the rules are introduced, the Department of Business, Energy and Industrial Strategy (BEIS) has clarified further how the regulations will be implemented.

[fulltext] =>

The guidance stated that subject to certain requirements and exemptions from 1st April 2018 landlords of non-domestic private rented properties may not start a tenancy with new, or existing tenants if their property has an EPC rating in band F or G.

From 1st April 2023, landlords will be prohibited to continue letting any non-domestic property which is already let if their property has an EPC rating lower than band E.

With some estimates suggesting the regulations could impact 20% of UK commercial property it is important that landlords act now to ensure that their properties are compliant.

To read the guidance in full, please click here.

Contact Us

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