Does my Property / Portfolio comply with the latest Commercial EPC legislations?
Last updated 14th May 2017
The Energy Performance of Buildings Directive (EPBD) Legislation is applicable within the UK (EPBD). This article focuses on the recent changes within England & Wales with regards to commercial properties.
Robert Corbyn clarifies some of the common misunderstandings about whether an EPC is actually required and the recent changes within legislation and answers some questions raised by Clients.
Robert previously covered commercial EPC costs in a previous blog post.
There have been many changes in the legislation over the past five years which may not have been updated within business publications and guidance notes to reflect these changes since the legislation was first introduced, especially on the Internet.
It can feel daunting, particularly with changing policies and the property industry is still scratching its collective head as building owners, contractors, sellers, and occupiers (and the enforcement officers) try to understand the changes and updates within the legislation requirements of the Energy Performance of Buildings Directive relating to Commercial Energy Performance Certificates (EPCs). Low Carbon Energy Assessors (LCEA) Ltd have simplified and summarized the latest changes in this article that came into effect at the beginning of 2013 following below: –
Who is responsible ? and are they complying with the Regulations?
The seller or landlord is responsible for ensuring there is a Commercial EPC for the building, or part of the building, being sold or let, even if an agent or another service organisation is acting on their behalf or providing an EPC. The seller or landlord must ensure any person acting on their behalf (i.e. estate or letting agent) is complying with the regulations.
Who is responable? and are they complying with the Regulations?
The seller or landlord is responsible for ensuring there is a Commercial EPC for the building, or part of the building, being sold or let, even if an agent or another service organisation is acting on their behalf or providing an EPC. The seller or landlord must, ensure any person acting on their behalf (i.e. estate or letting agent) is complying with the regulations.
What do I need when a property is about to be advertised for sale or let?
Before a building is put on the market the seller, landlord, managing agent, estate agent and any other third parties must ensure that an EPC has been commissioned before they can market a property for sale or rent. The seller or landlord or a person acting on their behalf must use all reasonable efforts to ensure the EPC is obtained within seven days.
Did you know that since early 2013 all sales or lettings advertisements for Commercial Properties must illustrate the EPC rating of the property being advertised within the advertisement. There is no requirement to display the full certificate within the advert, but where there is adequate space, the advertisement should show the A-G graph. Where this is not always possible, the advertisement should include the actual EPC rating of the property.
The EPC for the property, and its accompanying recommendation report, must be made available free of charge to a prospective buyer or tenant at the earliest opportunity, and in any event:
• when written information about the building is provided as a result of a request by a prospective purchaser
• All advertisements in the commercial media must clearly show the energy rating of the building.
• before a property is viewed.
• A copy of the EPC must also be provided to the successful buyer or the person who takes up the tenancy.
How often do I need to renew my EPC?
Commercial EPCs are valid for 10 years and can be reused as required within that period. A new Commercial EPC is not required each time there is a change of tenancy, or the property is sold, provided it is no more than 10 years old.
Note, the EPC should always reflect the building being sold or let. Therefore, if a building has a change in-use, or been converted into fewer or more units and changes have been made to the heating, hot water, air conditioning /ventilation services and changes within lighting systems (Building Services) a new Commercial EPC should be commissioned. This ensures that the certificate is representative of the property / unit being sold or let.
I have several EPCs for the same building / Unit which one should I use?
Where more than one is produced, the most recent EPC is the valid one.
Are you displaying your current Commercial EPC within your reception area?
Since early 2013, it is now a requirement for all commercial properties over 500m2 that are frequently visited by the public to display the valid EPC in a prominent place clearly visible to members of the public and where one has previously been produced for the sale, construction or renting out of the building.
Is an unheated Commercial building exempt from EPBD and an EPC not therefore required?
The guidance issued by all UK regional governments says that if a building is expected to have heating, mechanical ventilation or air conditioning installed, it will require an EPC based on the assumed fit-out in accordance with the requirements in Part L of the Building Regulations.
If a sale or lease transaction relates to a commercial property such as a retail shop, restaurant, café, take away, public house, wine bar, workshop, hotel, leisure centre, office, etc, (i.e. a building that is usually heated) then it requires an EPC whether or not a heating system is actually present.
Are there any buildings that are exempt?
The following buildings do not need a commercial EPC:
• buildings used primarily or solely as places of worship and for religious activities.
• temporary buildings with a planned use of two years or less, and industrial sites, workshops and non-residential agricultural buildings with low energy demand and residential agricultural buildings which are in use by a sector covered by a national sectoral agreement on energy performance.
• stand alone buildings with a total floor area of less than 50m2 that are not dwellings (‘stand alone’ means entirely detached, therefore if a building of only 20m2 attached to another property, then it is not ‘stand alone’ and requires an EPC) Part of the 2013 update, buildings and monuments officially protected (Historic & Listed buildings) as part of a designated environment or because of their special architectural or historic merit in so far as compliance with certain energy efficiency requirements would unacceptably alter their character or appearance are exempt.
Which transactions are not considered to be a sale or rent?
The purpose of providing an EPC during the sale or renting process is to enable potential buyers or tenants to consider the energy performance of a building as part of their investment. Not all transactions will be considered to be a sale or let to which the duties apply. These include:
• lease renewals or extensions.
• compulsory purchase orders.
• sales of shares in a company, which does not involve the sale of the building in which that company is located, where buildings remain in company ownership.
• lease surrenders.
What about a Commercial property that is going to be demolished?
Commercial EPCs are not required on sale or rent for buildings due to be demolished, provided the seller or landlord can demonstrate the five key points have all been achieved, as listed below: –
• the building is to be sold or rented out with vacant possession.
• the building is suitable for demolition and
• the resulting site is suitable for redevelopment.
• all relevant planning permissions, listed building consents and conservation area consents exist in relation to the demolition, and
• they believe, on reasonable grounds, that a prospective buyer or tenant intends.
What happens if I don’t comply?
Enforcement is performed by local Trading Standards authorities who have powers to investigate and serve penalty notices for failure to comply with the EPBD legislation. They can request an EPC and recommendation report to be presented to them within seven days up to six months from when a person was subject to an EPC.
The penalty for failing to make an EPC available to any prospective buyer or tenant when selling or letting a commercial property is fixed at 12.5% of the rateable value of the property. The range of penalties under this formula is set with a minimum of £500 and a maximum of £5,000 with a default penalty of £750 where the formula cannot be applied.
If an eligible Commercial building fails to have a valid Commercial EPC, the organisation will be liable for a Penalty Charge Notice (fine) of up to £5,000 which could be repeated at the discretion of Trading Standards enforcement officer on a daily, monthly, quarterly or annual basis.
Any person who obstructs a Trading Standards Officer who has requested an EPC and recommendation report for inspection is guilty of an offence and liable upon conviction to an additional fine of up to £5,000.
Commercial EPC Regulations and Exemptions Explained