Commercial Energy Performance Certificates

Just how important are Energy Performance Certificate (EPC) ratings in commercial property? Very important, if you want to lawfully let commercial premises and avoid complications should you require finance to purchase.

Who’s affected?

Owner’s, occupiers, purchaser’s – EPC’s can have an impact on you.

Since 1st April 2018 it has been a legal requirement for commercial properties to hold an EPC. And commercial properties now require a minimum rating of ‘E’ before the premises can be leased. This also affects Lease renewals. So if you’re a seller or a purchaser, EPCs can affect the value and lending process. And with two sets of regulations in force, it is critical to ensure you are complying.

Consequences

If you don’t already hold an EPC or the rating is ‘F’ or ‘G’ you run the risk of future fines of up to £150,000. Acting now could save money, vacancy rates and increase market appeal. The cost of assessing a property’s efficiency can be a small proportion of the cost.

All commercial properties must hold an EPC rating of 'E'

EPC Overview

Commercial EPCs initially began from April 2008 under Energy Performance of Buildings Regs 2007 and from April 2018 the additional Energy Efficiency Regs 2015 came into force and both remain valid. More information on this legislation can be found here.

Until April last year the attention to a properties EPC rating was not high on the agenda and as a commercial agent I can say that the number of times I was asked about the rating was infrequent. The earlier part of last year saw the question raised more frequently but as the new standard came into force it was evident the importance was still unclear to a large proportion of Landlords/sellers.

The later regulation captures all commercial properties including:

  • All new lettings must hold an EPC rating of E or above
  • All lease renewals must hold an EPC rating of E or above
  • Sales of commercial buildings

Most properties must have an EPC

Most commercial properties being let or sold must have an EPC. The EPC must be in place at the time the property is offered but a commercial property can be sold even if the rating is below an ‘E’, whether vacant or with an existing lease in place. In this instance a low value EPC can have an affect on the marketability, the value a purchaser puts on the property (taking into consideration works required to improve the rating) and lenders are now focusing on EPC’s for lending purposes.

It is now illegal to let a commercial property without an EPC in place and with a minimum ‘E’ rating.

What doesn’t require an EPC?

There are some exceptions to the EPC regulations such as if it is a listed building. But a qualified assessor will advise where factors such as property size and use result in a property being exempt.

Where improving the EPC rating is not cost-effective it is best to apply for an exemption.

Forthcoming Regulations

From April 2023 all commercial properties, including those with existing Leases will have to hold a minimum EPC rating of ‘E’ to be compliant. In practice, all landlords should take professional advice on their property portfolio in advance of these new regulations. Mounsey Surveyors can put you in contact with a qualified commercial energy assessor and assist for further advice or discuss the implications with you further.

What should you do?

Contact Mounsey Surveyors for a free initial consultation. Where we will be happy to offer examples of how improved efficiency ratings can benefit you and your Tenants. You may find there are cost effective solutions to comply, assist with lease renewals as well as attracting new Tenants. For Seller’s, a compliant rating will improve the marketability of your property and satisfy a buyer’s lenders requirement.