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EPC’s – A Threat or an Opportunity For Commercial Property Landlords?

Suzi Carter, a Chartered Surveyor with 25 years’ experience in the commercial and residential property sectors, comments

Energy Performance Certificates (EPC’s) have already been a part of property landlords’ lives for many years. However, there are changes coming into force in the next few years that could have game changing implications for many investors in commercial property. It may not be the most exciting of topics but it has potentially far reaching implications.

Since 1 May 2018, in England and Wales, it has been illegal to do a new letting of a property with an EPC rating of less than E unless there is a valid exemption. These exemptions include, amongst others, listed buildings, temporary structures, some industrial sites or workshops, and detached buildings with a floor space of less than 50sqm. Some vacant properties and buildings that are due for demolition are also exempt.  

The EPC requirement for E and above will be widened from 1 April 2023 to capture all let properties in England and Wales, even if there has been no change in tenant.

In June 2021 a consultation closed which is looking to enhance EPC ratings for commercial buildings even further, in England and Wales (there is a separate consultation and proposed regime for residential buildings). The Government is proposing that by 2030 all non-residential buildings should achieve an EPC rating of either A or B, should this be able to be reached ‘cost effectively’. It seems likely that this will become law given the support received during the consultation. Various matters still require clarification, including whether the range of current exemptions should continue and whether the standards required in each EPC band should remain the same. There will be various milestones along the way – including a proposed C rating by 2027.

The most recent consultation is also seeking to address various important points of detail, including greater clarity around the requirements for older and listed buildings; putting some detail around a ‘payback calculator’ (if the works are deemed ‘uneconomic’ there is a potential exemption) and what happens to properties that are let in a ‘shell and core’ condition. This is very common with commercial properties and effectively means that the landlord will let the building structure ready to receive a tenant’s fit out. Obviously, in this case the tenant should have some obligations to comply with the regulations.   

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