How will EPC Regulations affect landlords?

With the continuing cost-of-living crisis, ways in which to cut carbon emissions and achieve greater energy efficiency has never been so important.

As of 1 April 2023, the next round of EPC Regulations came into force as part of the government’s push to achieve net zero emissions by 2050.

Going forwards, all commercial property on a lease tenure basis must have an energy performance certificate (EPC) rating of band ‘E’ or above in order to be let or sold. Failure to comply with these new regulations could see landlords potentially face significant fines of up to £150,000.

What does it mean for landlords?

Landlords are required by law to ensure that their properties meet the required EPC rating. Currently, all commercial property must hold an EPC rating of ‘E’ or above prior to any new leases or renewals being granted – a requirement since April 2018.

From 1 April 2023 the requirement was extended to all nondomestic rented properties including existing tenancies on most commercial properties.

Looking ahead, minimum compliance standards will be increased in phases to an EPC rating of ‘C’ by 1 April 2027 and ‘B’ by 1 April 2030.

Are there any exceptions?

Exemptions can apply where undertaking works to improve an EPC rating is either not possible or not economically viable.

Examples include:

• Where the cost of improvement works would exceed the expected value of energy bill savings over seven years

• Property devaluation

• Third-party consent (refusal of planning permission for improvement works)

Landlords seeking an exemption must make sure to apply for, and register an exemption which is valid from six months up to five years, after which a landlord must try again to make building improvements.

Get an EPC Assessment

It is advisable to have an EPC assessment carried out as the resulting recommendation report will give you a good place to start in establishing what additional measures or works are required to improve the energy rating of your building.

Completing this exercise in advance of needing a new EPC for your property will allow you the time to plan and budget for the works required to ensure your building remains lettable at the next relevant lease event.

These works can then be incorporated into the planned preventative maintenance (PPM) schedule for your building.

Who pays for the works?

Careful review of the lease will establish whether a landlord or tenant is responsible for the building fabric and services, and therefore who should implement and pay for the required improvement works.

Vail Williams can provide the technical expertise and property advice necessary to support you in improving your EPC rating, whether you are a landlord or tenant.

EPC ratings are more important than ever –

Have you checked yours?

The changes have now already taken place to have an EPC rating of ‘E’ or above, but prepping in advance is key. For any queries on EPC assessments you may need, contact Nick Miles on nmiles@vailwilliams.com