Energy Performance Certificates (EPC) have been known to us for the last 6 years and are now well established with the commercial property sector. The EPC assessment had been reviewed in 2011 (In Scotland) and was strengthened to encourage owners and tenants to look attentively at the energy efficiency of a commercial property.
The regulations surrounding Energy Performance Certificates (EPC) will be changing on the 1st of April this year, and will affect both residential and commercial properties which are in the private rented sector.
The UK Government have identified the built environment as one the prime contributors to Greenhouse Gas emissions, and are trying to meet their set target of 80% carbon reduction, meaning the Government have the intent to reduce all CO2 emissions, and commercial properties must be close to zero by 2050.
The Government are hoping with the introduction of MEES and Energy Action Plans that the overall energy efficiency of properties will increase, resulting in lower CO2 emissions.
England & Wales
Focusing on non-domestic properties, in England and Wales there are new Minimum Energy Efficiency Standards which will apply from April 1st, 2018. The Minimum Energy Efficiency Standard is the rating of E meaning if an EPC rating is F or G it could be illegal to grant a new lease for renting out the property.
If you are renting out a property which has an F or G rating, it is the responsibility of the landlord to act, so if they wish to lease their commercial property, that the energy efficiency rating falls between A – E EPC ratings.
Furthermore, there will be further regulation changes in 2023 on EPC also. This change entails that from April 2023 MEES will be extended to all leases, including existing leases. Whereas the change in April of this year only applies to landlords who are under the E rating to upgrade before granting a new tenancy to new or existing tenants.
For Scotland, Scottish Ministers have the powers (but not a duty) to implement domestic and non-domestic private rented sector energy efficiency regulations. Although, the Scottish Government have opted to use section 63 of the Climate Change (Scotland) Act. Under section 63, ‘Energy Performance of Non- Domestic’ buildings there are provisions that require the Scottish Government to regulate the assessment and overall improvement of energy efficiency within non-domestic properties.
In Scotland an alternative approach has been taken. Rather than properties with an EPC rating of F or G being deemed as unsuitable and not liable to be let, properties that fail to achieve energy efficiency standards in line with 2002 building regulations will be obliged to be improved via the Energy Action Plan (EAP), which is reinforced by the Scottish Government.
Changes for Commercial
There is a large amount of uncertainty around the change in regulation, especially around which buildings are eligible, example – individual holiday homes. At first it was thought that Holiday Lets where exempt, but they are being treated the exact same as the private rental sector.
The impact that the changes in EPC bring for many commercial property owners could be massive. There is still the approach of ‘I’m sure my property is fine’ but the reality is, there is chance of properties not being up to the new EPC standard. It has been estimated that 18%- 20% of non-domestic properties (not including holiday lets) have the EPC ratings of F and G, which will involve significant costs to bring up to the appropriate standard.
A simple example: You own 5 non-domestic properties, which all need their lights upgraded. If you have 10 lights in each property, then that is 50 lights which must be changed. Costs have dropped significantly in energy saving bubs, however, that’s with the assumption that you will only have minimal changes to implement. LED 13W bulb costs on average £4.50 x 50 (number of light bulbs needed) = £225. This calculation may vary depending on the size of bulbs and the amount.
If you would like more information on EPC or how you could bring your businesses EPC rating up to standard, please feel free to get in touch at 0141 212 8909 or email us .