Insights

Will your commercial property meet April’s new EPC legislation?

Next month (April 2023), commercial property landlords will only be able to rent buildings with an Energy Efficiency Performance (EPC) rating of E or above.

The government is extending the Minimum Energy Efficiency Standards (MEES) from April for commercial property preventing renewals or granting of leases if the premises has an EPC rating of F or G. Commercial landlords who do not comply can be liable of fines from £5,000 to £150,000.

If the building is rated G or lower, landlords will need to undertake work such as insulation or replacing the boiler to increase the building’s energy efficiency sufficiently to boost it to F or higher.

Last year, Bensons Gas Engineering undertook an analysis of the energy efficiency of non-domestic commercial property Understanding the New Regulations for the UK Minimum Energy Efficiency Standard - Property Notify and found properties most likely to fall short of the new requirements were venues such as theatres, cinemas and music halls with 47.2% having a rating of F or G whilst 37% of libraries and museums had an energy rating of F or G.

However, commercial property landlords needing to make energy efficiency improvements would do well to think longer term since the government has set a deadline of 2027 for all commercially rented properties to meet the C rating.

As the government ploughs on towards its net zero target of 2050, it wants all commercial properties to achieve an EPC rating of B by April 2030 New EPC Regulations expected in 2025 | Today's Conveyancer (todaysconveyancer.co.uk) .

The route to B is in stages or ‘compliance’ windows. The first is expected to start in April 2025 when a valid EPC will need to be submitted although only those with C or above will be deemed as compliant and any property below will need improvements to bring it up to the minimum standard by 1 April 2027.

The second compliance window is expected by 1 April 2028 when a valid EPC of B or above is required with a two-year period for measures to bring non-compliant properties up to this standard when a new EPC will need to be submitted.

Around 18% of commercial properties are currently rated F and G nationwide although there will be some exemptions such as some listed buildings.

If you’re a landlord with commercial property in and around Kingston-upon-Thames and South West London and you’re concerned that your premises may not meet the EPC criteria for April or you want to prepare for future EPC requirements, you can contact Bonsors for advice. In some cases, the tenants may be responsible for MEES compliance, Bonsors will be able to advise and negotiate whether on behalf of tenants or landlords. Bonsors can arrange EPC renewals whilst landlords who may wish to sell can handover the entire process to the Bonsors team.

Tempting though it may be to just aim for a rating of E to meet the 1 April 2023 deadline, Bonsors would caution against such a course of action given the minimum standard is set to rise in the not-too-distant future.