Date:  31 July 2008

ENERGY PERFORMANCE CERTIFICATES FOR COMMERCIAL PROPERTY- AN UPDATE

As from April 2008 pursuant to The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 an Energy Performance Certificate (“EPC”’) became required for transactions in respect of all buildings with floor areas of over 10,000 square metres.

However we have now entered the second phase of EPC implementation so that from 30 June 08 the requirement embraces commercial properties with floor areas of over 2,500 square metres. The requirement will now therefore affect various every day medium size warehouses, offices, retail establishments, care homes and hotels.

Transitional Provisions- Where a building has already been marketed at the date it is affected by the regulations (i.e. as from 30th June 2008 in the case of buildings with a floor area over 2500 square metres) the seller/ landlord must start making efforts to obtain an EPC for the property once contracts have been exchanged and in any event by 1st October 2008.

As from October 08 all commercial properties of whatever size will be affected. The only exceptions are:

• places of worship

• temporary buildings in use for less than 2 years e.g. site offices

• low energy demand buildings such as  agricultural buildings and barns

• stand alone buildings with a floor area of less than 50 square metres e.g. sheds.

In addition, not all transactions are caught, e.g. surrenders, lease renewals and not for value transactions, inter group transfers etc.

For a property caught by the requirement, an EPC should be provided to a prospective buyer or tenant (without charge) at the earliest opportunity before exchange of contracts and not later than the earlier of the prospective buyer or tenant’s first visit to the property or the release of marketing material to him. In general terms, once granted, an EPC will be valid for 10 years, (although there are reports of the Government considering reducing validity to 2 or 3 years in due course).

The requirement does not affect existing leases; the EPC only becomes necessary upon the grant of the first new lease after the implementation of the scheme for the property concerned.

Further, there will be no need for a new certificate upon a change of tenant as long as the original EPC is still valid.

All new build commercial property will require an EPC, whatever the floor area. 

Failure to provide an EPC where required will be enforceable by Trading Standards and penalty fines of up to £5,000.00 will apply where an EPC is not provided within 6 months of the date due. In the case of new builds, enforcement will be by Building Control.

As a seller or landlord, the key must be to address the requirement in good time and to plan accordingly. In this way you can avoid your transaction being delayed whilst a survey is carried out and a certificate ssued.

Forewarned is forearmed!

Clive Vernon