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This is the first part of a two-part article considering the implications of the Energy Performance of Buildings (England and Wales) Regulations 2012 (EPC Regulations) and the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES Regulations) in relation to the grant of a new lease of commercial premises. In this part, we consider what an Energy Performance Certificate (EPC) is, when it is required, what exemptions apply and what the implications are of not having a valid EPC in place before a new lease is granted.
The commentary in this article focuses on the requirements when granting new leases of commercial premises only. Different rules apply in relation to sales of commercial and residential properties, leases/tenancies of residential property and ongoing compliance obligations during the term of any lease/tenancy.
An EPC is a certificate prepared by a qualified energy assessor following an inspection of the premises. The EPC gives an energy efficiency rating between A (most efficient) to G (least efficient). An EPC is valid for 10 years.
The energy assessor will also produce a Recommendation Report for the premises. The Recommendation Report will list works which are recommended to be done to improve the energy efficiency of the premises and will confirm the anticipated impact on the energy efficiency rating if each of the recommended works are implemented.
EPCs and Recommendation Reports are recorded on an online register which can be searched here.
Unless the commercial premises in question are exempt (see below), a landlord must produce a valid EPC for commercial premises to a prospective tenant prior to granting a new lease of those commercial premises.
If a previous EPC for the commercial premises has expired, it will no longer be valid and a new EPC will be required before a new lease of those premises is granted.
Whilst most premises are required to have an EPC, certain premises are exempt from the requirement. The following are the most common examples of exempt premises:
It is a common misunderstanding that all listed buildings are exempt. This is not the case. Such buildings are only exempt in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance.
Consequently, in practice, landlords proposing to grant a new lease of a listed building may require advice from an energy assessor as to what energy performance requirements will be required and from a local authority conservation officer or similar expert as to whether such requirements will unacceptably alter the character or appearance of the premises before they can determine whether they are required to obtain an EPC for the premises.
If the premises are not exempt, the landlord can be fined between £500 and £5,000 based on the rateable value of the commercial premises if the landlord does not make an EPC available to any prospective tenant before a new lease is granted.
In the second part of this article we will consider the implications of the EPC rating in relation to the Minimum Energy Efficiency Standard (MEES) in more detail but, broadly speaking, the landlord will be prohibited from granting a new lease of commercial premises where the EPC rating is below the MEES at the relevant time.
For detailed guidance regarding the requirement for an EPC for commercial premises, refer to the Government guidance here.
If you require further legal advice, please contact one of our experienced solicitors by emailing hello@glanvilles.co.uk who would be happy to assist.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice, and should not be relied upon as advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. All content was correct at the time of publishing. Legal advice should always be sought in relation to specific circumstances.