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Are you ready for new EPC requirements

Published on Tuesday, 17 October 2017

New Energy Performance Certificate (EPC) standards come into force in April 2018 which will see properties with an F or G rating classified as sub-standard.


The MEES (Minimum Energy Efficiency Standards) Regulations will make it illegal to newly let or re-let properties which do not meet the new minimum requirement after April 2018.

Both commercial and domestic buildings will require an EPC rating of E or better under the new forthcoming standards. A property rated F or G, the lowest ratings, will need to be improved in order to meet the minimum standard if it is to continue to be let.

Large fines and penalties can be imposed for landlords, home and property managers who don’t comply. 

An EPC ‘tells’ a potential tenant or buyer the energy efficiency of the building which can influence rental and sale value. EPCs are valid for 10 years after which a new one is required.

Some properties are exempt:-

Offices and warehouses under 50 square metres of floor space
Mixed-use properties under 50 square metres of floor space (farms, petrol stations, shops)
Unsafe or unused properties
Properties set to be demolished
Listed buildings
Residential buildings which are used for less than four months of the year
Places of worship.

 

Both the Royal Institution of Chartered Surveyors (RICS) epc-explained and the Residential Landlords Association (RLA) landlord/guides/minimum-energy-efficiency-standards.shtml provide comprehensive guidelines whilst the government’s guidelines can be found here energy-performance-certificate-commercial-property .

 

MEES applies to the grant of a lease on or after 1 April 2018, including lease renewals. MEES will apply to all existing leases from 1 April 2023 when the regulations will be extended to cover all leases, including existing ones but only if the property is legally required to have an EPC. However, Colliers warns Countdown to minimum epc Standards that not all listed buildings or those in a conservation area will be automatically exempt from the regulations. 

 

MEES also does not apply to very short lettings, or to lettings of 99 years or more. Landlords undertaking all cost effective improvement measures (according to the seven-year payback test) where buildings still do not achieve an E rating, will be exempt for five years. Other five-year exemptions include where third party consents are not available or refused (such as by a local authority) or if compliance would devalue the property by 5% or more. Exemptions will need to be lodged on a central register.

 

Penalties for non-compliance will be steep, maximum fines will be £160,000 per asset and will be largely based on the rateable value of a commercial property.

 

According to Knight Frank, it is estimated that approximately 20% of non-domestic properties could be in the F & G rating brackets energy standards factsheet

 

What should you do if your property is rated F or G?

 

Obtain quotes for costs and viability of making the necessary repairs and refurbishments to improve the building’s energy rating
Put together an Energy Efficiency Plan incorporating how to achieve the minimum standards 
Once a minimum E rating is gained and if empty, ensure the building is marketed appropriately including refurbishment and EPC information

 

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Bonsors are Chartered Surveyors and commercial property agents dealing with all aspects of commercial property in South West and West London, Surrey and Middlesex

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