Joscelyne Chase

Energy Performance Certificates

Joscelyne Chase | 27/03/18   Michael Carter

Current legislation derived from The Energy Act 2011 dictates that most domestic and commercial properties require an Energy Performance Certificate (EPC) prior to marketing driven by commitments to meet the UK’s forthcoming Carbon Reduction targets.

The introduction of the Minimum Energy Efficiency Standards (MEES), effective from 1 April 2018, will prohibit Landlords from renewing or granting new tenancies on properties that fall into the worst performing bands F & G. DCLG figures suggest that this could capture 20-25% of properties in England and Wales. This could have very significant implications for affected Landlords and occupiers wishing to assign or sub-let space who will be required to implement energy improvements in order to produce a compliant EPC. The expectation is that minimum standards could be raised even further by Government in the future.

The challenges facing property owners, occupiers and investors are likely to be far ranging as affected properties face obsolescence or lengthy void periods until improvements are carried out inevitably affecting income streams, ability to raise finance as some lending institutions take a harder line and ultimately capital value.

Interested parties are encouraged to review their portfolios identifying any poor energy performing properties. Checking the lease carefully will establish where statutory liability for improvements lies and how the cost is recovered. Tax advice is also recommended as opportunities may exist to take advantage of Enhanced Capital Allowances for certain plant and machinery investments. Practical issues such as timing of improvements and minimising tenant disruption must also be a consideration.

Financial penalties for non-compliance will be linked to the Rateable Value of properties typically ranging from £5,000-150,000 per property.

There are expected to be limited exemptions to the legislation including where improvements would result in a significant devaluation in market value or where the pay back period would exceed 7 years. It is therefore important to obtain professional advice from a qualified assessor before marketing or when contemplating any energy efficiency improvements.

 

Michael Carter
Elephant EPC’s
Qualified domestic and non-domestic EPC assessor.