Commercial EPCs – One Year On

Commercial EPCs – One Year On

The introduction of Energy Performance Certificates (EPCs) for almost all commercial buildings in October 2008 aimed to improve the energy performance of buildings and, eventually, for EPCs to have a significant impact on the value placed on eco-friendly buildings.

However, one year on, what impact has there been on property owners, landlords, purchasers, tenants and their professional advisors as a result of the new regulations?

Research

In May 2009, the National Home Energy Rating scheme (NHER) carried out research which identified that 81% of property agents, when asked, did not hold an EPC for property advertised and that 47% either did not believe one was necessary or just did not know. NHER also found that 36% of agents would only commission one at the point of sale.

Further, an informal poll that was carried out and discussed on a Royal Institution of Chartered Surveyors (RICS) internet forum found that the certificates are not taken into consideration at all as a factor in determining the purchase or rent of commercial premises.

In general, at the moment there appears to be widespread non-compliance in the provision of EPCs for commercial premises. Unlike the obligation on residential property agents, there is no obligation on commercial property agents to obtain an EPC before the property is advertised for sale or rent.

In practice this means that prospective purchasers or tenants do not have sight of the EPC until after they have made their decision to purchase or rent and sometimes the EPC is not seen until the transaction is near to completion.

Enforcement

If a landlord or seller does not obtain an EPC the penalty is payment of a fine of no less than £500 per building and a maximum fine of £5,000. The precise amount is calculated as 12.5% of the rateable value of the individual premises.

However, these fines hold no sanction where they are not seen to be enforced. There is industry wide criticism of Trading Standards, the appointed body responsible for enforcement, as being ‘guard dogs without teeth’ as no fines have been reported yet.

Some Trading Standards services have suggested that, as there needs to be a period for the implications to “bed in” and an opportunity for technical problems to be resolved, their approach to enforcement will only be reconsidered if it is found that the level of compliance proves to be compromised. A further suggestion is that Trading Standards are underfunded and, as such, the option of outsourcing the enforcement responsibility has not been possible.

The future

At the moment, it appears that EPCs are regarded as another item to tick off the list and acquiring premises with a good energy rating is not yet seen as a serious consideration. Also, having arrived as the economy started falling into recession, for many businesses EPCs represent another unwelcome cost to business at a difficult time.

Would more EPCs be provided if the onus was on the agent to provide the EPC at the outset, as is the case with residential properties?

Focus groups are lobbying the Government to consider alterative incentives to encourage purchasers, property owners and tenants alike to consider the energy efficiency of premises.

Whilst there is currently no record of any prosecutions, it is likely to be just a matter of time.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.