Proposed changes on Energy Performance Certificate (EPC)

A government energy white paper presented in 2020 laid out the proposed changes to Energy Performance Certificate (EPC) ratings in order to improve the efficiency of commercial lettings to move towards the Governments 2050 Net Zero Emissions standard. Currently, the government estimates that 18% of commercial properties are still in the F and G EPC brackets.

There has already been a minimum EPC rating of E since 2018 for any new tenancies, however the first substantive change will be from the 1^st April 2023, where this minimum rating will be applied to all existing leases, rendering it unlawful for a Landlord to continue letting a commercial property with an EPC rating of E or below.

The changing of the minimum threshold for EPC ratings will be introduced through a phased implementation of two separate “compliance windows”. At the beginning of each of these windows, the Landlord must show an EPC, and by the end of the two year window, they are required to have the property at the minimum EPC standard at that time.

The first window is expected to commence around April 2025, and the Landlord must present a valid EPC by that date. If the rating at that point is C or higher, than the property is considered compliant. If it is not at that level, then the Landlord must take remedial works to bring it to that level or above by the 1^st April 2027, assuming an exemption does not apply.

The second window starts a year later than this date, 1^st April 2028, where at the end of the two year window, ending 1^st April 2030, the Landlord must present an EPC rating of B or above, or have a valid exemption.

Should Landlords not comply with these restrictions, then they may face a proposed new penalty of £30,000. There is also plans to change this further, to a penalty being based on the property’s relatable value, to a cap of £150,000.

Whilst these are only proposals at the moment, it could mean greater costs being incurred by Landlords.

How can we help?

Our commercial property team at Fisher Jones Greenwood can help to identify if your property may be affected by these new regulations. Following this, our team can review and assess your leases to locate where these costs can be passed onto the tenants. We can also assist in finding and applying any exemptions that may exist for your property.

Please do contact the commercial property team on 01206 835316 or via [email protected] for further information.