It pays to be efficient

As of 1 April 2018, almost anyone seeking to let a commercial property now has to consider an additional complication: whether the property has a suitable Energy Performance Certificate (EPC).

If a non-domestic property is required to have an EPC and it is intended to be rented out, then, provided it already has an EPC with a rating of E or above, the landlord has nothing to worry about.

If the property has a lower F or G rating, then the landlord must take steps to improve its energy efficiency to a minimum rating of E. If he or she doesn’t, they will not be permitted to let the property.

In practice, the requirement for these improvements will mean more work for consultants and surveyors, and potentially more expense for landlords. This is not a cost that can legitimately be passed on to tenants.

However, there are some exceptions to the rules. Buildings which are listed or situated in conservation areas may not be required to have an EPC, and if the measures required to comply with minimum standards may alter the character or appearance of the building, then again an EPC may not be legally required.

Also, if it is impossible to install the relevant improvements, either physically or legally, or if the relevant improvements would still leave the property rated at F or G, or if the effect of the relevant improvements would devalue the property, the landlord may be able to register an exemption on the PRS Exemptions Register. This exemption will last for five years, and may be renewed, but cannot be transferred.

These provisions will have a significant effect on the investment value of properties. They will also need serious consideration when renewing a lease or at the end of a lease, when questions of dilapidations arise.

Nick is a practitioner with over 30 years’ experience. He specialises in commercial contract disputes and has particular expertise in contentious landlord and tenant work. Legal directory Chambers rates Nick for his property litigation expertise. They say he is: “‘highly knowledgeable’ and does a ‘very good job of handling clients,’ according to interviewees”. Nick is also ranked in the Legal 500 for his work in commercial disputes as well as property litigation. They quote that he “gives ‘careful, clear advice to clients’” and “understands clients’ needs”.