As many of our commercial property clients will be aware, there have been some key changes to the regulations relating to Energy Performance Certificates (EPCs) recently.
In brief, from April 2023, a Landlord cannot continue to let a commercial property that has an EPC rating of an F or G (there are, of course, some exemptions that may apply and I recommend that you ask us or your energy assessor about these).
So, why has this happened?
Well, it is all part of the government’s drive to hit net zero by 2050 and for us all to become more energy efficient.
What should I do now?
- Review your property portfolio – check your property’s current rating and the expiry date on the EPC Certificate (remember, these only last for 10 years);
- If your property is exempt, make sure you have registered for the exemption and keep on top of this (the exemptions apply for a limited time only!);
- Speak to an assessor early and find out what work will need to be done to maintain or increase your property’s EPC rating;
- Check your leases! Do you have the right to enter the property to carry out the works to improve the energy efficiency rating and can the cost (in whole, or in part) of any works be passed down to your tenant?;
- Start future proofing your leases! Make sure these are drafted so that you can take action to improve the EPC rating, when needed;
- Work with your tenant! It is in both of your interests for the property to have a good EPC rating.
What are the risks of non-compliance?
- Non-compliance with the Regulations may be publicised and could result in a financial penalty.
- Lenders are unlikely to lend on properties with low ratings.
- You could find that you have a property that you cannot let or finance!
- A lower rating could affect the value of the property (and may affect rent on a rent review).
- Requirements will only get stricter – it is likely that properties will need a rating of a C or higher by April 2027.