This year sees the implementation of Energy Performance Certificates (“EPCs”) for business premises.
They affect developers, owners, landlords and tenants and there will be fines for non-compliance, as well as the potential for causing delays in property transactions. Cousins Business Law advises you to get to grips with the new requirements now so you’re not caught out later.
This year, European Directive 2002/91/EC will be implemented in full for all buildings in England & Wales. The objective of this Directive is to promote the improvement of the energy performance of buildings within the Community. It was implemented over the last 12 months in relation to residential properties through the much publicised and criticised Home Information Pack regime.
For commercial properties, The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 impose obligations on commercial properties to have Energy Performance Certificates (“EPCs”).
An EPC gives a building an energy efficiency rating from A to G shown in the form of a chart of the type that has become familiar to anyone buying a fridge, washing machine or new car in recent years.
Do the Regulations Affect You?
If you are involved in carrying out construction or modification works to a building, then you will be under an obligation to provide an EPC to the owner of the building.
If you are the owner of a building and are either selling the building or letting it out, then you will be under an obligation to provide an EPC to the purchaser or tenant.
If you are the tenant of a building and you are selling your lease or granting a sublease, then you will be under an obligation to provide an EPC to the assignee of your lease or your subtenant.
What buildings are affected?
A building is defined by the Regulations as “a roofed construction having walls, for which energy is used to condition the indoor climate”, so buildings with a roof but no walls, walls but no roof, or a roof and walls but neither a heating nor air conditioning system will not require an EPC.
If the property meets the definition of a building then it will be covered by the Regulations subject to certain exemptions (e.g. places of worship, temporary buildings and buildings less than 50m2).
The Regulations apply to parts of buildings, so that letting out just one floor of a building would trigger the requirement to provide an EPC.
When do the Regulations take effect?
Since 6th April 2008, an EPC has been required on the sale or renting out of larger commercial premises (total useful floor area over 10,000m2).
From 1st July 2008, an EPC is required for premises over 2,500m2.
From 1st October 2008, the requirement for an EPC will be required on the construction, sale or renting out of all other premises.
The EPC must be made available when the property is marketed for sale or to let although there are transitional provisions for properties currently on the market.
What are your responsibilities?
If you and your building are affected by the Regulations, then you have an obligation to commission an EPC at your own cost, which must be prepared by a suitably qualified assessor. One of the practical problems is likely to be the lack of sufficient assessors to carry out the inspections and failure to obtain an EPC when selling or letting out premises may result in the transaction being delayed.
An EPC is valid for 10 years, so if one has been commissioned (whether by you or someone else) within the last 10 years, this can be reused (unless the property has been modified in the meantime).
What are the penalties for failure to comply?
Failure to provide an EPC can result in a fine of between £500 and £5,000 depending on the rateable value of the property. In view of the likely cost of producing the EPC, it has been suggested that some sellers and landlords may be tempted to risk paying the fine rather than going to the time and expense of having the EPC prepared. It is likely, however, that Local Authorities (who will police the regime through their Trading Standards Officers) will also be able to require the EPC to be produced in addition to paying a fine and may have the right to impose repeat fines if the EPC is still not produced.
If you have any questions concerning EPCs, please contact Steve Petty, our specialist property lawyer on 01926 629 005 or email Steve Petty here.