Minimum Energy Performance Standards and their impact on commercial landlords
Commercial landlords, of which there are many across the South West of England, should be aware of forthcoming changes in Minimum Energy Performance Standard regulations, as Ben Lucy, Associate Solicitor Commercial Property at Mogers Drewett explains.
Back in 2008 it became law that commercial properties would require an Energy Performance Certificate (EPC) on construction, sale or rent. This EPC would give information on the building’s energy efficiency.
Under the regulations, a non-domestic private rented property is defined as one which is let under a tenancy, and is not a dwelling. There are exceptions to this definition which include a property let on a tenancy for a term of six months or less (providing the granting of the tenancy does not mean the tenant will have occupied the property for in excess of 12 months), a property let on a tenancy of 99 years or more or where, despite reasonable efforts, the landlord cannot obtain the necessary consents to install the required energy efficiency improvements.
There are also exemptions to the regulations, for example; where a building is scheduled to be demolished; temporary buildings with a planned use of two years or less; industrial sites and workshops etc. with low energy demands; a standalone building with a floor space of less than 50 metres squared; and listed buildings if compliance with energy efficiency requirements would unacceptably alter their character or appearance.
In April 2018, further changes in the Minimum Energy Performance Standard regulations will come into force which should be of particular importance to commercial landlords as they will see a phased scheme which restricts them from letting premises with the lowest EPC grades of F or G unless improvement is not practical or an exemption applies.
The regulations will apply upon the granting of a lease to a new or existing tenant, and the maximum penalty for failure to make an EPC available to any prospective buyer or tenant will raise considerably from the current maximum of £5,000 to £150,000. The landlord will have six months from the date they become landlord in which to comply with the regulations, and will have the capacity to request a review if the local authority issues a penalty notice due to non-compliance with the regulations.
From April 2023 the regulations will be expanded to apply to all privately rented property including existing leases where the property is already occupied by a tenant.
If you would like more information please contact us on 01935 813691 or ben.lucy@mogersdrewett.com.