Advice on EPC’S in Commercial Properties

What is an EPC?

An Energy Performance Certificate (EPC) rates how energy efficient your building is using grades from A to G (with ‘A’ the most efficient grade). At present all non-domestic buildings (unless exempt, see below) trigger an EPC requirement when they are constructed, sold or let. It must be available to any prospective buyer or tenant free of charge as soon as the building is listed. EPCs became a regulatory requirement in April 2008.

What are the current regulations?

Since 1st April 2018 regulations state that an EPC requirement is triggered upon the construction, sale or letting of a non-domestic building. This includes lease renewals. The Minimum Energy Efficiency Standards state that from 1st April 2018 non-domestic property must have a minimum EPC rating of ‘E’ before it can
be leased or sold. Landlords must not renew existing tenancies or grant new tenancies if the property has a lesser rating.

From 1st April 2023 regulations will require all privately rented non-domestic property to have a minimum EPC rating of ‘E’, including those where a lease is already in place and a property is occupied. Therefore, all non-domestic landlords must not continue letting a non-domestic building with an EPC rating of band F or
G and arrangements must be made to reach a rating of ‘E’. If the property cannot be improved to meet the minimum MEES of rating ‘E’ there is a route for registering
an exemption through the PRS Exemptions Register; details of which can be found at Guidance on PRS exemptions and Exemptions Register evidence requirements – GOV.UK (www.gov.uk).

There are however certain exemptions which may mean your building does not require an EPC. At present there is no requirement to declare these exemptions.
The 2020 Energy White Paper published by the Government confirmed that the future trajectory for non-domestic Minimum Energy Efficiency Standards will be EPC B by 2030 as part of their net-zero campaign. This is still in consultation phase but is worth bearing in mind when considering your EPC obligations.

How do I know if my building is exempt?

In the following situations your building may be exempt if it is:

• listed or officially protected and the minimum energy performance requirements would unacceptably alter it
• a temporary building only going to be used for 2 years or less
• used as a place of worship or for other religious activities
• an industrial site, workshop or non-residential agricultural building that does not use much energy
• a detached building with a total floor space under 50 square metres
• due to be demolished by the seller or landlord and they have all the relevant planning and conservation consents

What is meant by ‘building that does not use much energy’?

Definition of a building
EPC regulations, as found in ‘A guide to energy performance certificates for the construction, sale and let of non-dwellings’ by the Department for Communities and Local Government define a building as: “a roofed construction having walls, for which energy is used to condition the indoor climate, and a reference to a building includes a reference to part of a building which has been designed or altered to be used separately”.
If the building does not have a roof and/or walls it does not require an EPC, nor would any other sheds or agricultural structures than do not fit the above definition.

Definition of ‘low energy’
The rules around ‘low-energy demand’ relate to whether energy is used to ‘condition the indoor climate’. We have seen references to ‘cow sheds’ by energy assessors as these do not come under the definition above and so do not require an EPC due to the low-energy demand. If your building or shed contains a welfare unit or office then this is no longer a ‘cow shed’ and would require an EPC as this triggers the ‘conditioning of an indoor climate’ requirement. This includes services
such as heating, mechanical ventilation, or air-conditioning. If any of these services exist the building will need an EPC in line with the minimum ratings detailed above.
Hot water provision, electrical lighting and wall or loft insulation are not services which ‘condition’ the indoor climate. A stand-alone toilet with no other welfare facilities will not trigger the EPC requirement. Retail type units, offices, leisure facilities and buildings which are expected to contain an office area or toilets – even if no heating is installed, or it has been removed – are not exempt. Energy assessors have confirmed removing fixed heating or air-conditioning will do not do away with the requirement.

If a building is to be let or sold with the intention of installing fixed services (constructed on a ‘shell and core’ basis) the EPC and the requirement to have one is based on the building’s use class under the planning legislation.

What should I do now?

If your building does require an EPC you will need to find an accredited non-domestic energy assessor to carry this out using the following service:
Find an assessor by postcode – Getting an energy certificate – GOV.UK (communities.gov.uk)
The penalty for failing to make an EPC available to any prospective buyer or tenant is fixed, in most cases, at 12.5% of the rateable value of the building, subject to a minimum penalty of £500 and a maximum of £5,000. There is a default penalty of £750 where the formula cannot be applied. If you are unsure if your building needs an EPC or would like any advice on the matter, please give Howie, Kent & Co a call to go over your options on 01621 212 651.