HOW CAN COMMERCIAL LANDLORDS STAY AHEAD OF THE LATEST EPC REQUIREMENTS?

If you own or operate commercial premises, it’s crucial to remain upto-date with ongoing changes to Energy Performance Certificate (EPC) regulations. Without the correct EPC ratings in place, it may be impossible to let your property.

Matt Breakwell of Kimpton shares his insights

An EPC provides a snapshot of a property’s energy efficiency and rates it on a scale of A (most efficient) to G (least efficient), valid for 10 years. EPC ratings are governed by the Minimum Energy Efficiency Standards (‘MEES’), which continue to undergo reform. Understanding these changes and ways to minimise their exposure to breaching them, should be a priority for commercial landlords.

MEES applies to the majority of commercial properties and has broad criteria. There are a limited number of exceptions and exemptions, but it is wise to assume your building does meet the qualifying criteria and investigate any possible exemption thoroughly.

If found to have breached the regulations, a landlord must pay a fine based on 10% to 20% of the rateable value of the property, with fines ranging from £5,000 up to a maximum £150,000.

They may also be included in a public register detailing their breach, creating a clear reputational risk in the wider market. What are the changes and how do I prepare?

A minimum rating of ‘E’ is currently required when a landlord grants a new lease on a commercial property. Changes made to MEES last year mean the same minimum rating is now also required for the continuation of an existing lease, even where there is no renewal or assignment of the lease.

Further reforms are also on the horizon, with government proposals to raise the bar of minimum EPC rating to ‘C’ for all commercial property lettings from April 2028, and then raise it further again to ‘B’ from 2030.

Landlords should ensure they have a valid EPC for each applicable property within their portfolio, issued by an accredited assessor. Furthermore, they should review their precedent leases and update them where necessary to reflect the new MEES regulations.

There are many ways to improve your EPC rating, such as renewing or adding insulation to your property, switching to LED lighting, installing a more efficient boiler or heat pump, or introducing new solar PV panels to boost your renewables mix. Kimpton can certainly help you with all of those.

Aside from making necessary efficiency improvements, landlords should also reduce the risk of a tenant obtaining a lower EPC rating by restricting their ability to obtain their own certificate or make any alterations that could adversely affect it

It may also be possible to pass part of the cost of energy efficiency improvements on to the tenant.

Plan ahead

The landscape is ever-shifting, so futureproof your portfolio today to help avoid problems tomorrow. There is no one-sizefits-all approach to improving energy efficiency, so landlords should consider the right options for them to achieve their specific goals.

Please remember, if your property isn’t compliant when the changes come into effect, it cannot be made available for let and won’t generate an income, so act quickly.

If you’d like honest and objective advice about the various installations to help boost your EPC rating, make your building more energy efficient and reduce your property’s carbon footprint, Kimpton may be able to help.

To find out more please email: website@kimpton.co.uk