Regulatory Changes Ahead for Commercial EPC
Back in April 2008, the UK introduced the EPC (Energy Performance Certificate) to help combat climate change and promote energy efficiency.
This certificate is a legal requirement for any property bought, sold or rented, it rates properties and highlights their areas for improvement.
However, changes are on the horizon regarding minimum energy efficiency standards (MEES) for commercial properties in the UK.
Whereas previously, it was illegal for a landlord to sell or rent a property with an EPC rating of F or G (unless they have a valid exemption), for new leases or lease renewal, from April 2023, this will be extended to all properties.
These changes are part of the UK government’s net-zero plan which aims to reduce carbon emissions by 2050.
In this article, you’ll learn everything you need to know about the changes to commercial EPCs that lie ahead and what you need to do if you are looking for commercial property or want to sell.
How does the EPC rating system work?
The EPC rating system has been designed to be easily comparable and easy to understand. It’s divided into six bands that run from A to G. An ‘A rating’ is the best energy efficiency rating your property could have, and G, being the worst.
As well as these bands, it uses a numbered system that indicates how your property has been assessed and runs from 1 to 100. The higher the number, the more energy-efficient the commercial property is.
You’ll also receive an ‘Environmental Impact Rating’ as part of your EPC. This is rated in a similar way and indicates your CO₂ emissions.
The EPC doesn’t only contain a rating for the current energy efficiency of the property. It also suggests areas for improvement and indicates what your potential EPC rating could be if these are implemented.
For ease of reference, the energy efficiency part of the EPC is colour coded from green to red (green is the best) and the environmental impact is colour coded from light blue to grey.
What do commercial landlords need to know about the changes?
From April 2023, commercial landlords won’t be able to renew an existing lease or grant a new lease if the property has an EPC rating of less than E. To ensure these new rules are adhered to, fines from a minimum of £5000 to a maximum of £150000 will be put into place.
These changes are most likely to affect older properties that struggle with energy efficiency such as theatres, cinemas, music venues, libraries and museums. As a result, many commercial landlords are planning to sell or lease a property before the changes happen.
However, there are certain exemptions for listed
What can commercial property owners do if their property is rated EPC F or lower?
Commercial property owners must make the suggested changes highlighted in their EPC certificate to raise the rating of their property. Any tenants may be asked to vacate the property whilst the work is carried out or contribute towards the cost of work.
The changes required to raise a commercial property EPC rating could include:
- Adding insulation throughout the property
- Replacing the boiler to a more energy efficient model
- Installing double glazing
- Switching to a renewable energy source
- Installing low energy lightbulbs
In many cases, this will be enough to meet the new regulations without further concern.
Tips for landlords looking to purchase a commercial property
If you’re a landlord looking to buy a commercial property, make sure you thoroughly research before you make a decision. As mentioned above, many landlords are selling because of the upcoming changes and the fact they have a very low EPC rating.
Find out why the property is on the market before checking the EPC certificate of the property. Even if the current EPC rating is low, the suggested changes may be affordable enough to implement without too much stress or additional expense.
On the other hand, if the EPC rating is low and there doesn’t appear to be much room for improvement, it might be better to consider investing in another property.
Tips for tenants looking to lease a commercial property in 2023
Businesses looking to lease a commercial property should make sure the building has an EPC rating of at least E. Ask for the EPC certificate before making any decisions.
If the EPC rating is lower than E, you could be evicted when the changes come into place in April. This would mean unwanted disruptions and additional costs that could affect the success of your business.
Conclusion
Commercial properties will require an EPC rating of at least E for all properties bought, sold or leased from April 2023. This will help increase our energy efficiency, reduce carbon emissions and help slow climate change.
Need help? Contact us today for advice or to book your Commercial EPC assessment.
