The Proposed New Energy Performance Efficiency Regulations
26 October 2015 by Jason Torrance
What are they and what are their implications?
An Energy Performance Certificate (EPC) is issued after an assessment has been carried out on a property based upon the construction, type of dwelling and relevant fittings such as heating systems, insulation and double glazing. The EPC provides the current and potential energy performance of the property, with each relevant element of the dwelling rated on energy efficiency taking into account factors such as the age of the property and the running costs of, for example, the heating system. The EPC is an important factor taken into consideration by potential buyers and tenants. Ratings range from A, being the most efficient, to G, being the least efficient. At present, information gathered from the EPC register suggests that 18% of commercial property has EPC ratings of F or G, with a further 20% having a rating of E.
The Energy Act 2011 imposes obligations on the government to ensure measures are in place to improve energy efficiency, making it unlawful to lease properties in England and Wales which do not meet certain standards. Following two government consultations, one in respect of domestic property and the other in respect of non-domestic property, draft regulations will be introduced to comply with these obligations.
Whilst these regulations are yet to be published, they will provide that, in summary, from 1 April 2018 there will be an obligation on landlords to ensure that their properties have a minimum energy performance rating of E. Proposals suggest that this obligation is likely to be staggered, applying to new lettings from 1 April 2018 and existing non-domestic property lettings from 1 April 2023. If landlords fail to meet the minimum standard, the potential consequences include being fined and/or required to carry out works on the property to meet the minimum standard, which may in turn affect the value of the property. It is further anticipated that the minimum E rating will rise in time. This potential requirement to carry out necessary works is subject to exemptions, including: where carrying out the proposed energy efficiency measures will result in the value of the property declining; a particular consent required by the landlord is refused or granted on unreasonable terms; or the proposed measure do not satisfy the golden rule test.
However, regardless of their EPC rating, these regulations will not apply to a number of properties including properties: being sold; which are occupied by the owner; outside of England and Wales; classed as ‘dwellings’ under the Energy Act 2011; occupied under a licence rather than a lease; that do not require an EPC rating, even if they have one; without an EPC at the time that compliance with the regulations is required; and potentially properties subject to very short or very long term leases.
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For further advice, please contact us and we would be happy to assist.