Energy Performance Certificates For Commercial Property Owners – A Simple Guide

For commercial landlords, it can be challenging to keep on top of ever-changing regulations that govern the property letting industry. One significant change in legislation is the Minimum Energy Efficiency Standards regulations, which mean that it will now be a legal requirement for them to operate energy-efficient premises.

The government have been pushing business owners towards making their premises as energy-efficient as possible for a few years. Still, newly introduced guidance drives commercial property owners to improve their buildings and prioritise energy efficiency.

With non-domestic buildings being responsible for around 12 per cent of the UK’s emissions, commercial property owners need to step up their game to reduce emissions. There is a lot for commercial landlords to think about, including getting an EPC rating for their property and protecting themselves and their livelihood with the right insurance, such as Brisco landlord insurance.

What are EPCs?

An EPC is an energy performance certificate and report that outlines the energy efficiency rating of a property. The report contains recommendations for ways in which the efficiency of the property could be improved.

Since 2008, all domestic homes and commercial buildings built, rented out or sold must have an EPC. A new EPC will also be needed if a property is significantly altered in any way.

EPCs play a significant part in the UK government’s net-zero by-2050 pledge. New standards were introduced in 2018, called the Minimum Energy Efficiency Standards (MEES), which make it unlawful for commercial property landlords to grant new leases or renew leases on commercial properties with an Energy Performance Certificate (EPC) below E.

When tested, the government estimates that almost one in five commercial properties wouldn’t achieve a rating above F. The new MEES will apply to all privately rented properties by April 2023, so landlords will be breaking the law to let commercial properties with an F or G EPC rating even during a lease term.

Are EPCs a legal requirement?

By law, all UK domestic and commercial properties available to buy or rent must have an Energy Performance Certificate (EPC). So if you are a landlord letting out either domestic or commercial property, you will need an EPC for each rental building.

However, there are a few exceptions where you will not require an EPC if you can demonstrate that the property is exempt, such as:

• Buildings used as places of worship and for religious activities
• Detached buildings with less than 50 square metres of total floor space
• Holiday accommodation that’s rented out for less than four months a year or is let under a licence to occupy
• Industrial sites, workshops and non-residential agricultural buildings that use limited energy
• Listed buildings that cannot have upgrades like double glazing
• Residential buildings intended to be used less than four months a year
• Some buildings that are due to be demolished
• Temporary buildings that will be used for two years or less

EPCs can be helpful for tenants looking for ways to help reduce their fuel bills by improving energy efficiency. Since April 2016, tenants can now seek permission from their landlord to make energy-saving improvements on their privately rented property.

What can you see on an EPC?

Not all EPC are identical in format, but they share the same information in the report. You can expect an estimate of the property’s current and potential energy bills. This is useful for helping to see how much lower running costs could be once energy-efficiency measures are adopted.

You will also see the energy efficiency rating for the property at the time of inspection. The rating ranges from A-G, with A being the best. The report will also show the potential rating if you implement all suggested energy-efficiency improvements.

Possibly the most critical part of the EPC is the recommendations section. This is where you will see a detailed breakdown of the recommended measures, costs, savings and how much each action could improve the property’s energy efficiency rating.

The report will list the top actions you should take to improve efficiency. The recommended measures will be recorded in order of importance, and you will see the energy-efficiency improvement based on making these improvements in this order. So, for example, your report may show potential energy savings from the proper loft and wall insulation based on current energy use. The number of recommended measures will vary according to the type and age of your property.

Your report may include suggestions for significant changes you can make to your property, such as installing low or zero-carbon energy sources, including solar water heating and Solar photovoltaics, which may help reduce energy bills and cut carbon emissions. These suggestions are not recommendations, but you could use them as a checklist to introduce over time to make your property as energy-efficient as possible.

Who produces EPCs?

It is the responsibility of the landlord to obtain an EPC. Should your commercial or domestic rental property be given a rating of F or G, then you will need to take steps to improve it to meet the minimum ‘E’ rating before you can grant a new tenancy.

Once you have taken all the necessary steps to upgrade your property and improve its energy efficiency as recommended, you will need to get a new EPC to verify that your building now meets the minimum requirements.

To do this, you will need to appoint an accredited energy performance assessor to inspect your property and produce an EPC before you let out your property. You can check the energy performance certificate register website to find a local EPC provider near you.

Your energy performance certificate cost will vary according to the type and size of property you own. You can search energy performance certificate by postcode to get a more accurate price for your EPC, as prices can also vary across the country.

Conclusion

Because the legal requirement for landlords to carry an EPC for their rental properties has been in force since 2008, landlords looking to sell or rent out their domestic or commercial properties will need to obtain an EPC before marketing their properties to buyers or potential tenants.

Since changes came into force in April 2018, meaning their properties need to achieve a minimum rating of ‘E’, landlords must ensure their properties reach this rating by performing all the necessary energy-efficiency changes required to meet the new requirement. Landlords failing to meet the minimum efficiency requirement now face a financial penalty of up to £4,000. From property damage to liability claims, our business insurance policies at Brisco Business provide comprehensive protection for your company.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin