As of 1st April 2018 regulations state it will be unlawful to let properties in England and Wales, which do not meet a satisfactory energy performance standard. All new lettings and leases will require their EPC rating to be an E or above.
Information from the national EPC register indicates that 18% of commercial buildings have EPC ratings of F or G and another 20% are E Ratings.
The regulations apply to the Non-domestic rented sector; they apply to the granting of all leases to new and existing tenants; they do not apply to sales or tenancies of 6 months or less (providing the granting of the tenancy does not mean the tenant will have occupied the property for over 12 months). The regulations apply from 1 April 2018 and are aimed at improving the energy efficiency of non-domestic buildings across the rented sector.
The minimum standards are for an ‘E rated’ EPC, ratings of ‘F’ and ‘G’ will not be able to be let as of 01/04/2018 except under ‘PRS exceptional circumstances’
It may be possible that a building with an F or G rating could be let, under the following circumstances; in these circumstances the property must be registered on the ‘PRS exemptions register’ by the landlord, along with evidence for the exemption:
- The measures required to improve the property to an E rating have a payback period of more than 7 years (in which case the property must be improved as much as possible with measures that will pay back within 7 years). This is to ensure that measures installed are cost effective
- The landlord is unable to obtain the necessary permissions to undertake the improvement works (from local planning, superior landlords or the in-situ tenants). In this instance the Landlord must be able to demonstrate that ‘reasonable efforts’ have been made to obtain such permissions.
- A suitably qualified expert provides written evidence that installing the identified measures required to improve the property to an E rating will reduce the property’s value by 5% or more
Where a tenancy is granted by operation of law, the landlord will have 6 months to comply with the regulations, similarly where a non-compliant property is sold with a tenant in situ, the new landlord will have 6 months to comply with the regulations.
Local authorities, such as Trading Standards will enforce these provisions. The penalty for non-compliance will be a minimum £5,000 up to a maximum of £150,000.
From 1st April 2023, the regulations will apply to all tenancies, including where a lease is already in place and occupied
How GreenFish Consulting can help?
We are introducing an EPC +, which will help identify the most cost effective measures bespoke to your property to ensure the building reaches an E or higher. Obviously making changes to your property can take time, money and resources, however we are introducing this service now to give all landlords a head start in making the relevant changes before the April 2018 deadline.
Many landlords are unaware of the most cost effective, and sometimes simple, changes that can be made to enhance the rating on an EPC which is why we feel this service would be beneficial to all landlords.
Our EPC + service will include the provision of a draft EPC based on the current conditions. If the building does not meet the required ‘E’ rating, we will re-simulate the building with different scenarios until the building does achieve a better grade than ‘E’ thus making it compliant. This would then be formulated into a report, recommending the most cost effective and fastest paybacks to the landlord. Once improvements have been made to the building, we would then lodge the final EPC with the improved rating.
Contact Jennifer Webb, our Client Development Manager who will be able to discuss your requirements in more detail.