An EPC is required for the sale or letting of all commercial properties from 4th January 2009.
The EPC, along with its accompanying recommendation report, must be made available for the property, free of charge, to a prospective buyer or tenant at the earliest opportunity and in any event:
- When any written information about the building is provided as a result of a request by a prospective purchaser or tenant.
- When a viewing is conducted.
- Before a contract to sell or let is entered into.
It is not placing a property on the market that defines the point at which an EPC must be made available, but any of the circumstances listed above.
A Vendor or Landlord should order an EPC at least 14 days before it is required to avoid any penalty charges. Therefore, if your property is on the market and you expect viewings, provide written information or to exchange contracts, you should obtain an EPC as soon as possible.
Who is responsible?
The Vendor or Landlord is the ‘relevant person’ under EPC legislation and is responsible for making the EPC available. The Vendor or Landlord, not the Agent, is liable to a penalty charge if the EPC is not made available. It would be good practice, however, for any Agent offering a property for sale or let on a Vendor's or Landlord’s behalf to inform the Vendor or Landlord of the legal obligation and to recommend that an EPC is obtained as soon as possible.
What is the penalty charge?
In most cases, the penalty charge will be 12.5 per cent of the rateable value of the building with a default penalty of £750 where the formula cannot be applied. The range of penalties under this formula are set with a minimum of £500 and capped at a maximum of £5,000. In addition you will also be required to commission an EPC Report with immediate effect.
How long will the EPC be valid for?
Each property’s EPC is valid for 10 years. However, if modernisations are carried out it may be advantageous to have the property re-assessed to reflect the improvements.
How much will an EPC cost?
The cost will vary depending upon the size and nature of the property, however costs can be kept to a minimum if scaled plans of the property and details relating to the heating/cooling system are supplied. Rory Mack Associates have an arrangement with four local independent consultants who are qualified to provide EPC reports. Once instructed to place your property on the market we would normally forward sales/letting particulars to each consultant who in turn will revert back to us with a quotation. The quotations will then be forwarded to the client who would normally instruct the cheapest consultant to prepare the report. We would subsequently receive a copy of the report, which we would issue, on your behalf to potentially interested parties.
For any additional information regarding EPC reports please contact our offices where one of the members of the agency team will be happy to help.
New 2018 commercial EPC regulations
The new EPC regulations mean from 1st April 2018 it is now illegal to lease or let a commercial property in the UK with an EPC rating of F or G, under Minimum Energy Efficiency Standards (MEES). These new minimum standards were released by the Department of Energy and Climate Change on 22nd July 2014 and confirmed on 5th February 2015.
The regulations state that the minimum energy efficiency standard a commercial – or non-domestic – property must meet is a grade E. The standards are intended to assist the UK government in achieving the obligations set out in the Energy Act 2011, specifically to improve the energy efficiency of property in the commercial sector.
Between 2008 and 2015, 35% of commercial buildings in the UK with an EPC certificate were rated E, F or G, suggesting a significant percentage of non-domestic property could be affected by the new regulations. This could cause issues when you are letting a commercial property, or alternatively seeking to renew a lease, as a property must be improved to at least an E rating before it can be rented to commercial tenants.
Are all commercial properties included in the new 2018 regulations?
All non-domestic property classified in the Energy Act 2011 – properties let on a tenancy which are not residential dwellings – are governed by the MEES regulations if they sit within the usage classes of A1 – D2.
The only exemptions from MEES are properties which are not required to adhere to EPC regulations.
What are the next steps for complying with the 2018 epc regulations?
If any of your commercial properties fall below the required energy efficiency standard of grade E, you should consult a specialist energy assessor in your local area who will be able to provide expert advice on how to improve the efficiency of the property. They can also provide an energy performance certificate if you require one.
What are the exemptions?
There are several exemptions from compliance and therefore allow a property to be legally let with an EPC rating below “E”:
1. Where third party consent is denied- where consent from person such as a tenant, a superior landlord or planning authorities is refused or has been given with conditions with which the landlord cannot reasonably comply;
2. If energy efficiency improvements would negatively impact the value of the property or:
3. If all improvements possible at no upfront costs to the landlord have been undertaken but the rating is still below an “E”.
In all instances, the exemptions are only valid for five years and cannot be transferred to a new landlord. Also, all exemptions must be registered on the central government PRS Exemptions Register.
Penalties for Non-Compliance
Local Weights and Measures Authorities (LWMAs) will enforce the new regulations and will have powers to impose civil penalties determined by the property’s rateable value. If a let property is found to be in breach of the MEES Regulations and a penalty is imposed, the lease between the landlord and the tenant remains valid and in force.
Where the breach is for less than three months, the fine will be the equivalent of 10 per cent of the rateable value of commercial properties, subject to a minimum penalty of £5,000 and a maximum of £50,000 and £2,000 for residential properties.
Where the breach is for more than three months, the fine will be the equivalent of 20 per cent of the rateable value for commercial properties subject to a minimum penalty of £10,000 and a maximum of £150,000 and £4,000 for residential properties.
