Bolton Birch has had an active management policy on commercial property energy issues for some time now ahead of the new changes to Energy Performance Certificate (EPC) Regulations.
Landlords must have achieved an EPC rating on new leases of at least A-E, since 2018. But from 1st April 2023, the regulations will extend to all leases, however old, with just a few exceptions.
Martin Dodd, Director at Bolton Birch commented:
“Commercial property landlords are at risk of unwittingly breaching the regulations, so it is vital that anyone involved with commercial property understands what the changes mean and what they need to do to comply less than a year away.
“EPC rating is based on factors including a building’s age, insulation and heating systems. While the regulations are unlikely to be a problem for a commercial building constructed within the last decade, there could be a problem for older properties, such as historic buildings converted into offices or retail outlets in traditional high street properties. Cheshire and Chester have more than their fair share of historic buildings.”
Landlords will face penalties of up to £150,000 for breaching the new regulations based on the length of time of the breach and the rateable value of the property. Details will be published, possibly causing damage to reputation. The landlord will not be able to let the property until improvements have been made and the expected EPC rating is achieved. Tenants will not be able to sub-let the property and the potential sale value of the property will be diminished.
Improvement works could be very disruptive to tenants who do not want business disruption and landlords may need to increase rents to recover the costs of improvements, the timing of these changes needs advance planning.
There are ‘cost effective’ and ‘devaluation’ exemptions if changes to the building reduce the property’s value – the landlord will not be required to make them, however exemptions need to be pre-registered on the exemptions register before April 2023. This exemption will last for five years and landlords of properties that do not meet the exemptions will be given six months to make improvements and comply.
Martin Dodd added;
“Any property energy performance improvements will also need to be evaluated for lifetime value relative to the minimum energy efficiency standards (MEES) a ‘D’ rating or above by 2025, ‘C’ by 2027 and a ‘B’ or above by 2030, to support the Government’s Net Zero targets.
“Bolton Birch’s active energy management policies extend from EPC ratings to regular reviews of renewable energy suppliers, energy consumption reduction programmes including advice on sensors, sub-meters and LED lighting, and tariff switch reviews and management.
“Now is the time to consider your energy actions if you are selling letting or subletting a building.”