News

EPC regulation changes for commercial property from 1 April 2023

Posted: 20 October 2022

Landlords should prepare for the next round of EPC regulations coming into force on 1 April 2023 as part of the government’s push to achieve net zero emissions by 2050.

2018 saw the Minimum Energy Efficiency Standards (MEES) come into force which brought about the requirement that no new tenancy be created without the property having an Energy Performance Certificate (EPC) rating of E.

From the 1 April 2023, this requirement will tighten so that all tenanted commercial properties will have to achieve an E rating or less on their EPC, regardless of whether the tenancy is new.

EPC rating changes

What should you look out for as a landlord when looking to purchase a property?

Landlords should be looking for a commercial building with at lease the minimum EPC rating of at least E or above. Purchasing a property with a lower EPC rating than E could lead to difficulties in leasing the property out with the new UK Law is enforced in April 2023. If you are an existing landlord, leases should be reviewed to check whether works can be carried out to improve the EPC rating and whether the costs of improvement can be passed to the tenant.

What should you look out for as a tenant when looking to rent a property?

As a tenant looking to lease a commercial property, you should be very careful when checking the history of the building. Making sure the commercial property has an EPC rating of E or above is essential to prevent any disruption, eviction or even the potential of having to pay a contribution cost towards energy improvement. You should also be aware of the landlord’s rights (if any) to enter the property to carry out energy improvement works.

Are there any exceptions?

Landlords will be exempt from having to comply with MEES if they can demonstrate one of the following:

  • All cost-effective energy efficiency improvements, either within a 7-year payback or under the Green Deal’s “Golden Rule”, have been carried out;
  • Consent to undertake works is refused by a third party, such as a Local Authority or an incumbent tenant; or
  • A suitably qualified expert provides written advice that the improvements would result in a devaluation of the property by 5% or more, or that the works would damage the property.

Exemptions last for five years and will need to be lodged on a centralised register to be created by Government.

Further Milestones

Looking further ahead, landlords also need to be aware of future proposals for the minimum standard to be increased to band ‘C’ by 1 April 2027 and band ‘B’ by 1 April 2030. If you have any questions or need any advice on commercial properties please get in touch with our commercial department. Alternatively call 01245 493 959 or  send an email

 

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