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Morrlaw Business
Commercial Buildings Must Go Green
From April 2008, the owners of commercial buildings must obtain an Energy Performance Certificate (EPC) or face fines.
The implementation of the law in this area has been staggered so that by 6 April 2008 newly built or newly leased buildings of over 10,000m² must have an EPC. This obligation extends to buildings of over 2,500m² by 1 July 2008 and to all other commercial buildings by 1 October 2008. There are further regulations that also apply to local authority buildings. The latest Building Regulations will also have an impact on energy efficiency requirements of existing, as well as new, buildings.
Energy Performance Certificates
- The EPC requirement is triggered by the sale, lease or underlease of a property.
- An EPC will not be required when a lease is surrendered, renewed, extended or is subject to a compulsory purchase order.
- The EPC is valid for 10 years unless it is superseded by a requirement for a new EPC.
- An accredited assessor must be commissioned to carry out the assessment.
The EPC is a standard measure of the energy efficiency of a building. The system rates a building on a scale from ‘A’ to ‘G’ where A is the most efficient. If a building has low energy bills, it will be likely to be fairly energy efficient and this would be reflected in its EPC.
An advisory report containing guidance as to how the energy efficiency of the building may be increased will also be prepared with the EPC. The EPC and the advisory report must be registered with the local authority.
Penalties for Non-Compliance
Under the 2007 Regulations governing the law in this area (The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007), a fine of 12.5% of the rateable value of the property will be applicable (subject to a minimum of £500 and a maximum of £5,000) when an EPC is not obtained on the sale or lease of a commercial property.
Green Leases of the Future
It has been suggested that buildings which are less energy efficient may be subject to lower market values in the future. This in turn may impact a tenant’s decision to take up a lease and may affect any future rent review of the building. It is also envisaged that a landlord may be able to demand a higher rent for a lease of a more energy-efficient building.
With the global trend towards environmental protection and the increased interest in preventing climate change, the EPC is another step towards standardising the approach in the commercial sector. There is a definite trend in favour of being environmentally friendly and it is clear that many corporations pride themselves on being energy efficient. It would seem, therefore, that it is in a landlord’s interest not only to obtain an EPC, but to obtain one which contains a good energy-efficiency rating.
For further information contact Nirav Patel on 01737 854510 or email nirav.patel@morrlaw.com