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Commercial property update: Energy Performance Certificates

01 June 2008

The much hyped Energy Performance Certificate (EPC) is already required for the sale of a domestic property and is now being extended to commercial property.

There will be a phased delivery between the private and public sector during 2008, and from the 6 April 2008 an EPC will be required for the construction, sale or rent of buildings with a floor area over 10,000 square metres. From the 1 October 2008, an EPC is required on all other buildings. Between those dates there are many variables, depending upon the area and type of building, but the ultimate objective is that a certificate must be provided whenever a building is constructed, sold or rented. In addition, a certificate will have to be displayed in all public buildings over 1000 square meters.

The intention is that the certificate will be an incentive to incorporate energy efficient technology and design, thereby allowing the occupants lower running costs. The certificate itself looks like a much more elaborate version of those found on fridges and washing machines and will cover such matters as heating, air conditioning, lighting and the thermal characteristics of the building, together with a recommendation report for the improvement of the energy performance in a building. The calculations, or formula, to be involved are complex and will normally be undertaken by surveyors.

The costs of obtaining an EPC and accompanying reports is likely to be anything from £250 to £500 for a small non- domestic building, to over £10,000 for very large non-domestic buildings. The certificates will be supplied free of charge to a prospective buyer or tenant of a building by the seller or landlord. A building is classified as any roofed construction having walls for which energy is used to condition the indoor climate and can refer to the building as a whole, or parts that have been designed or altered to be used separately. This, however, could cause problems for existing tenants of a multi-let building who will need an EPC to underlet or assign their lease. Unless the landlord has commissioned an EPC, it will be the responsibility of the tenant of the unit, and who may need to acquire one for the whole building, something which may not be very practical.

The certificate (and accompanying reports) must be stored centrally and must be no more than 10 years old. There are some exemptions to requiring an EPC, such as places of worship, buildings with a planned use of less than 2 year, low energy demand buildings (such as agricultural buildings) and stand alone buildings of less than 50 square meters.

Enforcement will be by the local authority trading standards officer who can require sight of the certificate which then has to be produced within 7 days of being requested. Failure to produce an EPC for non dwellings can be 12.5% of the rateable value subject to a minimum of £500 and a maximum of £5,000. Appeals can be made to the county court.

Pat Davies is a partner in the commercial property and residential property team at Thames Valley law firm B P Collins. The practice is unique in the region for the depth of experience of their property team and has a long and successful record of involvement in every aspect of commercial property acquisition, disposal, funding and development for a wide range of established organisations and developers.