Under new regulations for commercial landlords, properties that require an Energy Performance Certificate (EPC) must obtain a minimum efficiency rating of an E before they can be let.
An EPC provides information on how energy efficient a building is by giving it a rating of A (very efficient) to G (inefficient). This rating system helps tenants to ascertain how much it will cost to heat and light the building, as well as an indication of the level of carbon emissions. The certificate also suggests ways that a more efficient rating could be achieved.
The minimum energy efficiency standards (MEES) come into force in April 2018, from which time landlords cannot grant a new tenancy agreement or renew an agreement if a commercial rented property has an EPC rating of F or G. From April 2023, landlords must not continue to let a commercial property under an existing agreement if it does not meet the minimum energy efficiency criteria. BEIS has issued full guidance on the requirements and possible exemptions under the legislation.
Some landlords may find that exemptions apply to them. For example, if it can be shown that all possible improvements have been made but the property remains below an E rating, an exemption can be registered. Alternatively, under the seven-year payback test, the installation of improvements is only required where a payback will be achieved within seven years or less. Full details of how the payback should be calculated can be found in the government guidance. Measures that usually have a lower payback period include retrofit lighting, insulation solutions, and the maintenance of existing heating and air conditioning systems. Once the installation of capital equipment is required, the payback periods can become longer.
EPCs are valid for a period of 10 years and are often not revisited in that time because the certificate applies to the building rather than the owner, although it can be updated on a voluntary basis. The introduction of MEES is likely to lead to a rise in the issuance of certificates and could increase the demand for energy efficiency measures, thereby supporting growth and innovation in the green construction industry. A review of the regulations will be held and published every five years to see whether objectives are being met.