Energy Performance Laws; Go Green Or Go Home
Go ‘green’ or go home; the energy performance laws that could make renting your business premises illegal.
It goes without saying that for a variety of reasons, some buildings are more energy efficient than others. Energy efficiency in buildings is typically rated on a scale from ‘A’ to ‘G’ with ‘A’ being the most efficient and ‘G’ being the worst. Now energy performance laws require buildings to have an ‘E’ rating as an absolute minimum – otherwise the building cannot legally be rented out and there are potentially costly implications for all concerned.
WHERE CAN YOU FIND THE RATING FOR YOUR BUILDING?
Most buildings (both commercial and residential) will have an Energy Performance Certificate. An EPC is prepared by a qualified energy assessor and sets out the building’s current energy efficiency rating and typically includes recommendations as to how the property can be improved. In most cases it is now a legal requirement for the owner of the building to make sure that they supply the EPC to any potential tenants or buyers so that the interested parties can consider the efficiency of the building when deciding whether to take the property on.
THE ENERGY EFFICIENCY REGULATIONS & SUBSTANDARD BUILDINGS
The Government has, over the last few years, implemented a package of energy efficiency laws to improve energy efficiency in our buildings and to encourage landlords to bring their sub-standard properties up to scratch by carrying out energy improvements. The ‘energy push’, energy efficiency regulations now deem all commercial premises which have an EPC rating of “F” or “G” as “sub-standard” premises.
THE BAN ON LETTING SUBSTANDARD PROPERTIES
Landlords that own substandard commercial premises must not let that premises out (unless there are specific exemptions which apply to them). Under the legislation there are two key dates:
- 1st April 2018 – after this date Landlords were banned from granting any new tenancies of sub-standard buildings; and
- 1st April 2023 – after this date the rules will also apply to tenancies that have already been granted in sub-standard premises and from then onwards the landlord will be prevented from continuing to let the property out.
WHO PAYS FOR THE IMPROVEMENTS?
The regulations are designed to encourage landlords to make improvements to their buildings so the responsibility should lie with them. However, landlords will want to pass all costs for repairing, maintaining and running a building, to its tenant. Tenants therefore need be careful as it is likely that their landlord will (if the lease allows them to) try and require the tenant to pay for the cost of the works. This could be in the form of increased service charges, or an obligation on the tenant to carry out the works themselves.
THE NEED FOR ADVICE
There are some types of properties, tenancies and landlords where the regulations will not apply so it is important to obtain proper advice. Where works are required because a property is substandard, the cost of those works could be substantial. Rental and sale prices are likely to be affected if repairs are outstanding at the time a property is marketed and failure to comply with the regulations and the ban on lettings could result in hefty penalties. Tenants need to be vigilant when taking on leases of commercial premises as they could unintentionally sign themselves up to costly improvement works under the terms of their lease.
Amanda Bonnick is a Partner at Wollens specialising in commercial premises and has a wealth of experience dealing with business properties. If you have any questions or concerns about the energy performance laws or energy efficiency of your business premises, if you are looking to relocate your business or if you need assistance with any other matters relating to commercial buildings, get in touch by calling 01392 274006 or email Amanda.firstname.lastname@example.org