What is the impact of new changes in EPCS?

Legal requirements of Energy Performance Certificates (EPCs) for Commercial premises are changing next April.

Currently, Commercial properties, like Residential, require an EPC unless they are exempt.

Exemptions fall under strict criteria including:

• Properties which are listed or officially protected meaning the minimum energy performance requirements would unacceptably alter it
• It is a temporary building only going to be used for two years or less
• It is used as a place of worship or for other religious activities
• The property is an industrial site, workshop or non-residential agricultural building that doesn’t use much energy
• It is a detached building with a total floor space less than 50m2
• It is due to be demolished by the seller or landlord and planning consent is in place

From April 2018, it has been a requirement that properties with a low rating of F or G (A-G scale) had to be upgraded otherwise they could not be legally let.

However, the rules are changing again in April 2023, so that existing Commercial leases with an EPC need to comply with a minimum E rating to continue being let. Again, there are some exemptions:

• If the consent of a third party is required to carry out works but this is refused (such as a local planning authority)
• The improvements would result in a devaluation of the property by 5% or more or that the works would damage the property
• All cost-effective improvements have been carried out but this still does not result in an EPC rating of E or higher
• The 'seven-year rule' whereby it can be shown that the improvements would not pay for themselves through energy savings within a seven-year period.

Exemptions are not automatic and require listing on a government register.

For non-compliance, landlords face a financial penalty based on 10-20% of the rateable value of the property between a minimum of £10,000 and a maximum of £150,000 per breach. The landlord in breach may also be published on a public register.

There is an expectation that the minimum level of an EPC will increase over time although nothing is definitive at this stage. There is speculation that by 2027 it could be a minimum C and by 2030, B.

For more information or advice on this issue, please contact Robert Flint, Commercial Surveyor, Divisional Partner, Norwich on 01603 598438.