Partner Article

Energy Performance Certificates for Commercial Properties - Be prepared

With Watson Burton LLP Law Firm

From 1 October 2008, an energy performance certificate (“EPC”) will be required on the construction, sale or letting of almost all commercial buildings.

What is an EPC?

An EPC is a document that provides an energy rating of a building based on the performance of the structure and its services. The building is rated in relation to how the building should perform in comparison to similar buildings. A sliding scale of “A” - “G” is used in EPCs; “A” being very efficient and “G” being very poor. An accompanying document is issued alongside the EPC containing recommendations that could be implemented by the owner to improve the energy performance of the building. At present, the property owner is under no obligation to act on those proposals although this could be the subject of future EU legislation.

When are EPCs required?

Currently, EPCs are required on the construction, sale or letting of a commercial property with a floor area of 2,500m² or greater. However, from 1 October 2008, every commercial property that is constructed, sold or let will be required to have an EPC unless one of the exemptions apply. The exemptions are narrow and include:

• buildings primarily used as places of worship;
• small non-residential buildings of less than 50m² floor space; and
• temporary buildings with a planned use of 2 years or less

Who prepares and pays for the EPC?

It is the responsibility of the seller of the property or landlord to make the EPC available to prospective buyers / tenants during the marketing of a building for sale or let. It is the property owner or landlord who will be expected to pay for an EPC although it is possible that, where production of an EPC is triggered by the request of a tenant (for example an assignment), the landlord may attempt to recover the cost from the tenant or proposed tenant. However, all EPCs are valid for 10 years unless the building or its fixed services are altered; therefore, an EPC triggered by one transaction will be readily available for future transactions.

Comment

There is some debate as to extent of the impact of EPC performance ratings on the rental or sale value of a property. What is clear, however, is that the government appears to be moving towards increased regulation in relation to energy efficiency and other green issues. Business owners with interests in property are therefore advised to keep abreast of developments and take steps to ensure that they are prepared for any changes. As they say, “watch this space”.

If you have any queries relating to this article or any other property matter, please contact David Hankin at Watson Burton LPP on 0191 244 4444 or email david.hankin@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .