New year brings new energy efficiency rules
New rules concerning Energy Performance Certificates (EPCs) for commercial buildings recently came into effect without much fanfare, explains Paul Brown.
Although unheralded, these changes have some significant implications for property owners and occupiers.
Shortly before the winter break, the Department for Communities and Local Government (DCLG) issued an update to the legislation concerning Energy Performance Certificates, which provide an A-G ranking of a building's energy efficiency. Produced by qualified assessors, generally ahead of the sale or lease of a property, EPCs are valid for up to 10 years.
This update came into effect earlier on 9 January at which point commercial property occupiers and landlords became liable for a number of requirements.
Display of EPCs in public buildings over 500sqm
The new rules mean that all commercial buildings over 500 sq m holding a current EPC which are frequently visited by members of the public, must display a valid EPC in a prominent and clearly visible place. Businesses that fail to comply can be fined.
Our interpretation is that this change will only apply where EPCs have been carried out to meet statutory requirements, and not where they have been undertaken voluntarily by landlords.
Although this does not require buildings that do not currently have an EPC to complete one to comply, an EPC will be required to be displayed if the property is subsequently sold, constructed or rented out.
Where EPCs are required, the responsibility for complying rests with the occupier of the property, which will potentially impact everyone from shops and restaurants to public sector sites where the public frequently visit.
Landlords should engage with their tenants and support them in meeting these changes, which appear to have been made to amend the previously planned requirement for commercial buildings to undertake Display Energy Certificates (DECs), currently in place for public sector properties.
Further clarity is being sought on the exact requirements as this may mean that occupiers of relevant property over 500 sq m would need to search the EPC register to see if an EPC exists for their property and display it.
Additional confusion comes from the lack of clarity around who exactly is responsible for these duties or what the penalty is for breach.
Property marketing particulars
For properties being marketed for sale or rent in commercial media, it is no longer necessary to include a facsimile copy of the EPC in the marketing material. If space allows, a copy of the A-G graph should be provided, as a minimum detail of the asset rating (e.g. 'C') must be included.
Commercial media includes: advertisements in newspapers and magazines; written material produced by the seller, landlord, estate or letting agent that describes the building being offered for sale or rent; and information provided on the internet.
DCLG stated that the original decision to include the first page of the EPC particulars was taken to promote the Green Deal, but that it now felt that this will now be promoted through a number of other sources.
Crucially, landlords should not see these changes as a relaxation in the importance of EPCs. Many potential purchasers or occupiers consider the EPC rating as part of their decision making process, before buying or letting.
The potential impacts of the Energy Act also bring significant risks to the poorest rated properties. Property owners should continue to improve their property EPC ratings - not just to improve environmental performance but also to maximise property values and to manage asset risks.
Properties exempt from EPCs
The list of properties exempted from holding EPCs was also amended under these recent changes and now include:
1. Buildings and monuments officially protected 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. Our understanding is that this exemption will only apply to a very limited number of properties protected by a preservation order and that not all listed buildings will be exempt.
2. Buildings used as places of worship and for religious activities.
3. Temporary buildings with a planned time of use of two years or less, industrial sites, workshops , non-residential agricultural buildings with low energy demand, and buildings planned to be demolished (where evidence exists for the intent to demolish or re-develop).
4. Stand-alone buildings with a total floor area of less than 50 sq m which are not dwellings, i.e. those buildings which are entirely detached.
5. Crown and statutory undertakers' buildings.
Owners and tenants of properties that do not fall into these categories should ensure they are compliant at the earliest possible opportunity.
Paul Brown is the head of sustainability for property services company DTZ