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Energy Performance Certificates - What are they, when are they required and why?

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Energy Performance Certificates - What are they, when are they required and why?

Energy Performance Certificate rules are changing next year. Landlords need to make sure that they are ready for these changes and that their EPC rating is improved if necessary.

In this article, Commercial Property Solicitor Hannah Martin outlines everything you need to know about EPCs and the upcoming changes to them as well as discussing how you can prepare.

What is an EPC for property?

Energy Performance Certificates (or EPCs) are documents which evaluate the energy efficiency of a property and grade it anywhere from an A to a G based on how efficient a property is.

How does EPC rating work?

A rating of A is best rating available, with a G being the worst.

How long is an EPC valid for?

EPCs are valid for 10 years and remains valid for all transactions within this period.

Is an EPC a legal requirement?

When a commercial property is sold, rented or constructed an EPC must be in place. This is a legal requirement.

A Landlord will be required to ensure that a valid EPC is registered against the property for the entirety of a letting.  

Why is an EPC a legal requirement?

EPCs are regulated by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.

The regulations aim to reduce the carbon dioxide emission of property’s and ‘call out’ non-domestic properties which are not energy efficient.

When is an EPC required?

Under the current regulations a Landlord is required to provide a valid EPC when granting a new lease of a Property.

This may be granting a new lease to a new tenant or renewing a lease with an existing tenant.  

What is the minimum EPC rating for commercial property?

The EPC must have a rating of E or above for the Landlord to be able to lawfully let the property.

What are the new EPC regulations?

From 1 April 2023, a Landlord will not lawfully be allowed to continue any lease over a Property which does not hold a valid EPC rating.

Therefore, landlords should start looking to improve the EPC rating of a property where this is necessary.

How do the new EPC regulations affect tenants?

The good news for tenants is that compliance with EPC regulations is ultimately the Landlord’s responsibility.

Breach of the regulations will not be sufficient for the landlord to refuse any lease renewal of the property nor will it affect the validity and rights available under any continuing leases.

When is an EPC not required?

There are some circumstances where a property may be exempt from requiring an EPC and are not required to comply with these regulations.

These include:

  • Listed buildings;
  • Temporary buildings (will only be erected for a maximum period of two years;
  • Used as a placed of worship or other religious activities;
  • An industrial site, workshop or non-residential agricultural building that does not use much energy;
  • A detached building where the floor space does not exceed 50 square meters;
  • A building which is due to be demolished.

If a Landlord believes that the Property is exempt from the EPC regulations they are required to register this on the Private Rented Sector Exemptions Register to be recognised.

What if the EPC regulations are breached?

If there has been a breach under the EPC regulations, for example the Landlord has let a Property that has a rating less than E, the enforcement agency have up to 12 months to serve notice of the breach.

The landlord will then be required to undertake the necessary works to the property.

What if I don’t comply with EPC regulations?

Landlord’s should be aware that failure to comply with the regulations can lead to a penalty of up to £5,000.

Who pays for an EPC breach penalty?

A landlord is not able to require a tenant to pay the penalty.

The only liability a tenant faces is if they fail to allow any enforcement agent access to the property when requested without a valid reason to refuse entry.

Who pays to improve an EPC rating?

A landlord would be wrong to assume the costs of putting right a sub-standard property is the tenant’s responsibility or that they can reclaim the costs.

Many leases prohibit a tenant undertaking works to the property even when where they are required to keep the property is good and substantial repair and condition.

Bright Commercial Property Solicitors

If you have any questions following this article, please feel free to get in touch with one of our bright experts.

We offer a free initial appointment for all new clients.

You can call 01202 499255, or fill out this form to get in touch.