If you’re a commercial landlord in the UK, you may already be familiar with the concept of Energy Performance Certificates (EPCs). But are you aware of the importance of an EPC, not just for compliance, but also for attracting and retaining tenants, reducing energy bills, and ultimately, increasing the value of your property?
In this article, I’ll explain what EPCs are, how they work, why they matter, and how you can use them to your advantage.
What are EPCs?
An EPC is a legal document that rates the energy efficiency of a building on a scale of A to G, with A being the most efficient and G being the least efficient. It also provides recommendations for how to improve the energy performance of the building and reduce its carbon emissions. EPCs are required by law for most commercial properties when they are constructed, sold, or leased, and must be renewed every ten years or sooner if significant changes are made to the building.
How do EPCs work?
To produce an EPC, a qualified assessor will visit your property and collect data on its construction, insulation, heating, lighting, ventilation, and other relevant features. They will then input this data into a software program that calculates the building’s energy efficiency rating and produces the EPC report. The report will also include an estimate of the building’s annual energy consumption and carbon emissions, as well as a list of cost-effective measures that could be implemented to improve its energy efficiency.
Why do EPCs matter?
EPCs matter for several reasons, both practical and legal. From a practical standpoint, having a good EPC rating can make your property more attractive to potential tenants or buyers who are looking for energy-efficient buildings that will save them money on their energy bills. It can also help you retain existing tenants who may be required to comply with energy efficiency regulations themselves, such as the Minimum Energy Efficiency Standards (MEES) that came into force in April 2018 and apply to properties with an EPC rating of F or G.
From a legal standpoint, failing to comply with EPC regulations can result in fines of up to failing to do so might result in fines of up to £150,000 for landlords. This means that it’s not just good practice to have an up-to-date EPC, but also a legal requirement.
How can you use EPCs to your advantage?
To use EPCs to your advantage, you need to understand what they mean and how they can be improved. Here are some tips:
Know your EPC rating
The first step is to find out what your current EPC rating is, and whether it meets the minimum standards required by law. You can check this on the EPC Register, which is a public database of all EPCs in the UK. If your rating is lower than you would like or below the minimum standard, you can take steps to improve it.
Understand the recommendations
The EPC report will include a list of recommendations for improving your building’s energy efficiency. Some of these may be relatively simple and inexpensive, such as switching to LED lighting or installing draught excluders. Others may be more complex and costly, such as upgrading your heating system or installing insulation. It’s important to understand which measures are most cost-effective and which will have the biggest impact on your EPC rating.
Prioritise the improvements
Once you know which measures you need to take, you should prioritise them based on their cost, impact, and feasibility. Some measures may be more urgent or practical than others, depending on your budget, timeframe, and the nature of your property. It’s also worth considering the
potential return on investment (ROI) of each measure, taking into account the energy savings and other benefits they will provide over time.
Implement the improvements
Once you have a plan in place, it’s time to start implementing the improvements. This may involve hiring contractors or specialists to carry out the work, obtaining any necessary permits or approvals, and managing the project to ensure it stays on schedule and within budget. You should also monitor the results of each improvement to see if they are having the desired effect on your EPC rating and energy bills.
Renew your EPC
Finally, it’s important to renew your EPC every ten years or sooner if significant changes are made to the building. This will ensure that your rating remains up-to-date and compliant with current regulations. It’s also a good opportunity to reassess your building’s energy efficiency and make any further improvements that may be necessary or desirable.
UK Legislation on EPCs
As mentioned earlier, EPCs are a legal requirement for most commercial properties in the UK. The regulations governing EPCs are set out in the Energy Performance of Buildings (England and Wales) Regulations 2012, which were updated in 2018 to include the Minimum Energy Efficiency Standards (MEES). The MEES require that all commercial properties with an EPC rating of F or G cannot be leased to new tenants or have their leases renewed unless they are improved to a higher rating or an exemption is granted. Similar regulations apply in Scotland and Northern Ireland.
On 1 April 2023, the next round of EPC Regulations came into force as part of the government’s push to achieve net zero emissions by 2050.
From that point forward, all commercial rental properties must have an energy performance certificate (EPC) rating of band “E” or better, and failing to do so might result in fines of up to £150,000 for landlords.
2027 and 2030
Landlords should be prepared for upcoming proposals to raise the minimum standards to band “C” by 1 April 2027 and band “B” by 1 April 2030.
EPC Exceptions and Exemptions
Whilst the new Regulations apply to all rented commercial premises (with the exception of those subject to leases of less than 6 months, or more than 99 years), limited exemptions do apply where undertaking works to improve the rating is either not possible or not economically viable.
Whilst this article does not go into detail on the exemptions available, any landlord seeking to rely on an exemption must make sure to apply for, and register an exemption. Exemptions are valid from 6 months up to five years.
Examples of EPC Improvements
There are many ways to improve the energy efficiency of a commercial property, depending on its size, age, and use. Here are some examples:
- Install LED lighting: LED lights use up to 90% less energy than traditional incandescent bulbs and last up to 25 times longer.
- Upgrade heating and cooling systems: Replacing an old or inefficient boiler or air conditioning unit with a modern, high-efficiency model can significantly reduce energy consumption and costs.
- Insulate the building: Adding insulation to walls, floors, roofs, and windows can reduce heat loss and improve comfort levels for occupants.
- Use renewable energy sources: Installing solar panels, wind turbines, or other renewable energy systems can generate clean energy and reduce reliance on grid electricity.
- Improve ventilation: Good ventilation can reduce humidity, odours, and pollutants, as well as improve indoor air quality and occupant health.
- Implement energy management systems: Make your building Smart. Smart meters, building automation systems, and other energy management tools can monitor and control energy use, identify inefficiencies, and optimise performance.
EPCS – An Opportunity to Improve Energy Efficiency
EPCs are not just a legal requirement for commercial landlords in the UK, they are also an opportunity to improve the energy efficiency, attractiveness, and value of your property. By understanding your EPC rating, implementing cost-effective improvements, and renewing your EPC regularly, you can reduce your energy bills, comply with regulations, and attract and retain tenants who value sustainability and cost savings. Remember, a better EPC rating doesn’t just benefit the environment, it benefits your bottom line too.
FAQs: Commercial EPCs
Is an EPC required for a commercial property?
Yes, in most cases. Commercial properties in the UK require an Energy Performance Certificate (EPC) by law, with a few exemptions.
What does a commercial EPC involve?
A commercial EPC involves an inspection of the building by a qualified energy assessor, who will assess the energy efficiency of the property and assign it an EPC rating based on factors such as insulation, heating, ventilation, and lighting.
What is the minimum EPC for commercial property?
The minimum EPC rating for commercial properties is currently E, but this will increase to B by 2030, with interim targets in 2025.
How do I get an EPC certificate for a commercial?
You can find a qualified energy assessor on the government’s register or through a certified provider, who will carry out the assessment and issue the EPC certificate.
Who pays for the EPC for commercial property?
The landlord or owner of the property is responsible for obtaining and paying for the EPC certificate.
How much do commercial EPCs cost?
The cost of a commercial EPC varies depending on the size and complexity of the building but typically ranges from £150 to £500.
What commercial properties are exempt from EPC?
Some commercial properties are exempt from EPCs, such as places of worship, certain listed buildings, and buildings that are due to be demolished or converted.
What are the new EPC regulations for commercial properties in 2025?
The new regulations for commercial properties in 2025 require a minimum EPC rating of C for new leases and lease renewals, with some exemptions.
What is the difference between a commercial EPC and a domestic EPC?
A commercial EPC is for non-domestic buildings, such as offices, shops, and warehouses, while a domestic EPC is for residential properties, such as houses and flats.
Can you let a commercial property with an EPC rating of F?
No, you cannot let a commercial property with an EPC rating of F or G, unless you obtain an exemption or carry out improvements to raise the rating.
Who is responsible for the EPC certificate?
The landlord or owner of the property is responsible for obtaining and displaying the EPC certificate.
Can I do my own EPC certificate?
No, you must use a qualified energy assessor to carry out the assessment and issue the EPC certificate.
How long does it take to do a commercial EPC?
The time it takes to do a commercial EPC varies depending on the size and complexity of the building, but typically takes a few hours to complete the inspection and a few days to issue the certificate.
Can I get my own EPC certificate?
No, you must use a qualified energy assessor to carry out the assessment and issue the EPC certificate.
How long does it take to get an EPC certificate?
The time it takes to get an EPC certificate varies depending on the energy assessor and other factors but typically takes a few days to a week.
How much does an EPC certificate cost in the UK?
The cost of an EPC certificate in the UK varies depending on the size and complexity of the building but typically ranges from £50 to £120 for domestic properties and from £150 to £500 for commercial properties.
Are EPC certificates compulsory?
Yes, EPC certificates are compulsory for most commercial and residential properties in the UK, with some exemptions.
How can I improve my EPC rating from D to C?
You can improve your EPC rating by carrying out energy-efficient improvements such as upgrading insulation, lighting, and heating systems. An energy assessor can provide advice on the most effective measures for your property.
What is commercial EPC Level 5?
Commercial EPC Level 5 is a measure of the energy efficiency of a building, with Level 5 being the highest rating. It indicates that the building is very energy-efficient and has low energy costs.
How do you get an EPC exemption?
You can get an EPC exemption if your property is exempt from having an EPC, or if you have carried out all possible energy-efficient improvements and the property still cannot meet the minimum rating requirements.
What is the EPC rating for commercial property in 2023?
There is no specific EPC rating for commercial properties in 2023, but new leases and lease renewals will require a minimum EPC rating of C.
What are the new requirements for EPC?
The new requirements for EPC include increasing the minimum rating requirements for commercial and residential properties, with the aim of achieving net-zero emissions by 2050.
What EPC rating is required in 2025?
By 2025, new leases and lease renewals for commercial properties will require a minimum EPC rating of C.
Can I sell a commercial property with an EPC rating of G?
Yes, you can sell a commercial property with an EPC rating of G, but you must disclose the rating to potential buyers and may be required to carry out energy-efficient improvements to raise the rating.
Is EPC rating F illegal?
No, having an EPC rating of F is not illegal, but it is illegal to let a property with a rating of F or G, unless you obtain an exemption or carry out improvements to raise the rating.
What makes an EPC invalid?
An EPC can be invalid if it contains inaccurate information, or if it was carried out by an unqualified energy assessor.
What happens if you let a property without an EPC?
If you let a property without an EPC, you could face a fine of up to £150,000, and it may be difficult to let the property in the future without a valid EPC certificate.
What does an EPC inspector look for?
An EPC inspector looks for factors such as the insulation, heating, ventilation, and lighting systems of the property to assess its energy efficiency.
Can you do an EPC online?
No, an EPC cannot be done entirely online. It requires an in-person inspection by a qualified energy assessor.
Can an electrician do an EPC certificate?
No, only a qualified energy assessor can carry out an EPC assessment and issue the EPC certificate.
Do estate agents do EPC certificates?
Estate agents do not usually carry out EPC certificates, but they can arrange for a qualified energy assessor to carry out the assessment.
Do you need an EPC if there is no heating?
Yes, you still need an EPC even if there is no heating system in the property.
Do estate agents charge for EPC?
Estate agents may charge a fee for arranging an EPC assessment, but the fee is typically paid directly to the energy assessor.
Can I use the previous owner’s EPC?
You can use the previous owner’s EPC if it is less than 10 years old and still valid. However, it is recommended to obtain a new EPC assessment to ensure accuracy and compliance with current regulations.