Non-Domestic EPC Assessments
Buildings are responsible for almost 40% of the UK’s energy consumption and carbon emissions. Energy Performance Certificates (EPCs) promote the improvement of the energy performance of buildings and are intended to identify ways in which a building can do this.
As part of our solar PV service this is included and is a requirement for the Feed-in-Tariff payment levels.
When EPCs are required:
An EPC is required when a building is constructed, sold or rented out:
- For buildings that are non-dwellings this requirement started for those buildings with a total useful floor are greater than 10,000m2 from April 2008
- For buildings that are non-dwellings with a total useful floor area greater than 2,500m2 this requirement started on 1st July 2008
- For all remaining buildings that are non-dwellings, save for a few exempted buildings from October 2008
EPC’s will be valid for a period of 10 years. Further to this, it is a requirement from 9th January 2013 for all non-dwellings frequently visited by the public to display a valid EPC in a prominent place clearly visible to members of the public.
Penalties for not having an EPC:
Failure to make an EPC available to any prospective buyer or tenant when selling or renting a non-dwelling is fixed at 12.5% of the rateable value of the building with a default penalty of £750 where the formula cannot be applied. The range of fines under this formula are set within £500 and £5,000.
A further penalty can be issued for failure to provide a copy of the EPC when requested to an officer of an enforcement authority (Trading Standards) within 7 days. This is fixed at £200.
Upcoming regulations to take into account:
As a further note, upcoming regulations will have an impact on how EPCs are managed. On the 22nd July 2014, the Department of Energy and Climate Change (DECC) released their consultations on the proposed Minimum Energy Performance Standards (MEPS) regulations. This has given some insight into how and when the market will be affected. Data from the national EPC register indicates that 18% of commercial stock has EPC ratings of F or G and a further 20% rated as E. The regulations will apply from 1st April 2018 with 3 possible outcomes:
- A soft start – meaning only new leases will need to comply with the minimum EPC rating of ‘E’ by 1st April 2018;
- A hard start – impacting all leases from the 1st April;
- A phased introduction – meaning a combination of the two. A soft start for all new leases by 1st April 2018 with a hard backstop of 2023 for all existing leases. This is the Governments preferred option.
As it stands, all let properties that have an EPC will be required to meet these regulation. However, the Government has proposed that any leases of less than 6 months or over 99 years shall be exempt from this. It is also possible that the regulations will impact on lease extensions and renewals. This would only apply to buildings with existing EPCs as these regulations do not control the regulations for EPC requirement.
The Government are proposing several instances where a landlord may be exempt from the above, and subsequently, are legally able to let a property with an EPC below ‘E’.
- If third party consent is denied (tenant, lender, planning authority or higher landlord/freeholder);
- If the necessary energy efficiency improvements to bring the building to compliance would have a negative impact on the value of the property;
- If all possible improvements at no upfront cost to the landlord have been undertaken, such as through a Green Deal finance arrangement or other specified means of calculating cost efficient works, and the EPC rating still falls below ‘E’.
In all the above, the regulations are likely to be limited to a time constraint for how long the exemptions apply. Initial propositions are leaning towards 5 years only, or upon tenants vacating the premises in the instance that the exemption was granted due to lack of consent.
Enforcement of the MEPS regulations will be controlled by Trading Standards Officers (TSO’s) who will assess wether a penalty should be given, along with a value. These penalties have not yet been set in place, but its safe to say these will be enough to encourage landlords to comply.