The Energy Efficiency (Private Rented Property) Regulations 2015 were instituted by the Government and came into effect in April 2018. The regulations have set new standards for landlords of both domestic and commercial properties to meet.
The regulations require properties to meet new standards of energy efficiency on a scale. However, the requirement is more stringent for commercial properties. Any properties which do not meet the minimum requirement cannot be let – needless to say, keeping up to date on the changes is a big deal.
1. What is an Energy Performance Certificate?
Energy Performance Certificates (EPCs) are documents which demonstrate the energy efficiency rating of a property.
EPCs show both a current and potential rating. EPCs are a legal requirement for “all non-domestic properties let under any type of tenancy, which are required to have to have an Energy Performance Certificate”, as noted in government sources. The certificates are valid for ten years.
2. Do your premises need to meet the regulation standards?
A building is required to meet the latest standards if it is deemed to require an Energy Performance Certificate by any of the following pieces of legislation:
– Energy Performance of Buildings (Certificates & Inspections) Regulations 2007
– Building Regulations 2010
– Energy Performance of Buildings Regulations 2012
However, there are some exemptions. Only properties let under a tenancy are required to meet the standard; properties let under other arrangements (such as let on licence or agreement for lease arrangements) are not.
Properties with tenancies of less than six months or greater than 99 years are also excluded.
3. What is the minimum requirement?
EPCs are graded from A to G: an A-rating is the most energy efficiency grade, while a G-rating is the least energy efficient. The new regulations stipulate that commercially-let properties must meet a minimum energy performance rating of E.
The standard isn’t too high, but for commercial landlords who are responsible for utility bills while properties sit empty, improving energy efficiency should be an important consideration.
Assessment and certification must be carried out by an approved organisation.
4. Are structural improvements necessary?
If you fall below the minimum requirement (i.e., an F or G-rating), then you will have to undertake work to improve its rating – as well as facing some penalties for non-compliance.
The work needn’t necessarily be structural, however. There are lots of small changes that can be made to improve energy efficiency, ranging from installing draft excluders to fitting insulation.
You can read more about improving energy efficiency on the Opus Energy website.
5. What happens if I don’t comply?
EPCs must be in place before a property goes on the market. Providing EPCs free of charge to any prospective buyer or tenant is also a requirement.
There are financial penalties for properties which fall short of the minimum rating. The penalties are significant, ranging between £2,000-£150,000.
The most obvious penalty for non-compliance is that you legally cannot lease your property if it fails to meet the minimum standard, resulting in lost revenue.
6. What do I do if I think I’m exempt?
There are some exemptions for landlords whose properties fall below the minimum threshold standard. In certain limited circumstances, landlords will not be liable for penalties.
Landlords whose properties meet these limited criteria must register with the self-certification database, the PRS Exemptions Register.
Exemptions are only valid for five years, and cannot be transferred to another landlord. For more information around exemptions, check out the government’s guidance here. You can see more government guidance around EPC regulations here.
Confident you’re doing everything you can to make your premises energy efficient?
Being energy-savvy can help keep your bottom line low, and it’s always worth speaking with your utility supplier to check you’re on the best contract possible for your property requirements.
At Opus Energy, for example, commercial landlords can save significantly by choosing a contract with no standing charge – meaning if your premises is empty, you won’t be charged a penny.