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Property owners must act on new energy rules

27/06/2016

Landlords and property owners have two years to comply with new legislation regarding energy performance.

Changes in Energy Performance Certificate regulation will come into force in 2018 as part of an initiative to prevent landlords from leasing inefficient properties.

What do the changes mean?

Under new rules it will be unlawful for a property to be sold or let if it has an energy performance rating below grade E and this will apply to both commercial and non-commercial properties.

The new rating for commercial properties will be based on CO2 emissions, (the EPC graph displayed on the first page of the commercial energy efficiency certificate) although the new rating for domestic properties will be based on fuel costs rather than CO2 emissions.

However, the new regulations willonly apply to properties that need to have an Energy Performance Certificate and will not apply to owner-occupiers or tenants. Leases granted for a term of 99 years or more, or 6 months or less are also exempt.

What happens if you sell of a property with an EPC lower than an E rating?

Enforcement of the regulations will be enforced via local Trading Standards Officers who will determine whether a penalty should be imposed and the level of penalty.

If a ‘penalty notice’ is served when the landlord has been in breach for less than 3 months, the financial penalty cannot exceed the greater of (a) £5,000 and (b) 10% of the rateable value of the property, subject to a limit of £50,000.

If the breach has been continuing for more than 3 months the financial penalty cannot exceed £10,000 or 20% of the rateable value of the property, subject to an absolute limit £150,000.

 Further to the financial penalties, a ‘publication penalty’ can be imposed on a corporate body.

However, a breach of the new regulations will not affect the validity or enforceability of a lease so a tenant can never be forced to vacate a property because it is considered to be sub-standard under the regulations.

Charlotte Nutting, Commercial Property solicitor at FBC Manby Bowdler expects the changes to be far reachingwith a large proportion of properties affected by the legislation changes.

She said; “Data from the national EPC register indicates that 18% of commercial properties have a rating of F or G and a further 20% have an E rating.

“All property owners who own a property which has an energy performance rating of F or G need to assess the costs and viability of undertaking retrofits or refurbishments, and possibly bringing forward properties for marketing prior to 2018.

“If a Property does have an energy efficiency rating of F or G or may potentially become one, then an Energy Efficiency Plan should be put in place to improve the energy efficiency of the property.”

The new ratings will apply from 1 April 2018.

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