FAQ's
- Commercial EPC's: What are they?
- When do EPC's become Law?
- So when do they need to be provided?
- Who is responsible for obtaining an EPC?
- What if they don't?
- How long is it valid for?
- Who can provide an EPC and what do they do?
- How can you help us?
- How might we help you?
- So are any buildings exempt?
- What about part-let space and Investment Sales?
- Can the cost of an EPC be re-claimed on the service charge?
- What about shops with residential above?
- What about guest houses?
- Will the law definitely come in on 1 October 2008?
- Why are we having Commercial EPC's anyway?
Commercial EPC's: What are they?
A Commercial EPC is effectively a 5 page document that;
a) Expresses the energy rating of the building (A [highest] - G [lowest] and a numerical value).
b) Contains the total useful floor area, address of property, name and address of the Energy Assessor and the date it was issued with a registered reference number.
c) Is accompanied by a recommendation report with suggestions of how the energy rating could be improved in the short, medium and long term.
When do EPC's become Law?
For buildings over 2,500 sq m (27, 000 sq ft) it is already a legal requirement since 1 July 2008.
For all commercial properties the regulations will apply from 1st October 2008.
So when do they need to be provided?
The commercial EPC must be provided by 'the relevant person' at the earliest opportunity and in any event before entering into any contract to sell or rent a building.
The regulations state that an EPC for all commercial property that is to let or for sale should be provided with the sales particulars or upon the first viewing whichever is the earlier.
Who is responsible for obtaining an EPC?
The regulations refer to a 'relevant person' as the person who is responsible for obtaining an EPC. The relevant person is referred to as either 'the seller' when a building is being sold or 'the prospective landlord' when a building is being rented out.
The regulations apply where the written particulars are given by the relevant person or another person on his behalf.
The person giving the sales particulars must ensure that they include an asset rating of the building or attach an EPC to the sales particulars. The sales particulars are described as any document containing two of the following; a photograph of any room in the building, a floor plan, a description of the size of the rooms. This includes electronically provided information.
On an assignment, although not stated categorically in the regulations the perception is that the assignor or tenant selling his lease, is deemed the seller and is, therefore, the 'relevant person'.
What if they don't?
If the relevant person or his/her agent does not provide a commercial EPC upon inspection or with sales particulars then he/she is liable to a fine from the local weights and measures authority (trading standards officer).
The officer can 'require a person who appears to him to be subject to any duties under the regulations to produce a copy of a valid EPC at any time up until 6 months after the marketing took place'.
The fine is based on a number of criteria but is mainly calculated on 12.5% of rateable value between a minimum of £500 and a maximum of £5,000.
The regulations state that the officer can give a penalty charge notice to any person who has committed a breach of any duty under the various parts of the regulations, in particular, 'the person giving the particulars' and 'the relevant person'.
How long is it valid for?
The EPC is valid for 10 years unless major modifications have been carried out to the property in that time period.
Back to QuestionsWho can provide an EPC and what do they do?
An EPC can only be carried out by a qualified Energy Assessor.
An energy assessor has to attend specific training, pass exams
and carry out several monitored energy reports before he/she is
accepted on a government approved accreditation scheme. This
normally takes about 6 months in total. In our office all of
our energy assessors have trained with the Building Research Establishment (BRE).
The basic standard is a level 3 assessor who is qualified to provide
EPC's for an estimated 75% of commercial properties in England and Wales.
They cannot assess properties with a more complex heating or cooling
system, typically air conditioning.
A level 4 assessor can carry out EPC's on the vast majority of commercial
properties. The exceptions are highly complex building such as shopping
centres with say an atrium etc. These can only be carried out by a level 5 assessor.
The commercial energy assessor works with a standard software system that is
referred to as SBEM. This is a much more complex system than the one used
for generating EPCs for existing residential properties, which is a reduced data SAP system.
The energy assessor will record and assess the thermal efficiency of the
fabric of the building the walls, roof, floors, windows, etc; and all the
services including heating, lighting, cooling, ventilation, type of switches,
etc. The building is zoned in some detail based on activity and energy
usage of that zone. This data is then entered into the software and
the final assessment is made. A number of recommendations will
be generated to which the assessor may add some of their own.
The main cost of the commercial EPC reflects the level of skill and knowledge
of the commercial energy assessor (who needs significant property knowledge
before commencing the course) and the time it takes to record all the relevant
data and input it into the software to obtain the EPC. This will rarely take less than a day.
How can you help us?
Some things can speed up the preparation of the EPC and may help reduce the cost or the time it takes to prepare. This includes the provision of any CAD drawings of the property, if available. Any detailed information of the services used, boiler type, cooling system etc. is also helpful.
Back to QuestionsHow might we help you?
It may be that you decide to carry out some of the recommendations we make
that could improve your EPC rating and thus make your property more saleable/lettable.
Some of the recommendations may be cost prohibitive, others not. By working with our
Commercial Energy Assessors it may be possible to improve, in the short term, or
demonstrate to potential tenants/occupiers how in the medium term the EPC rating
could be improved. This would reduce the energy costs of the building and reduce
the carbon footprint and therefore make it a more attractive building,
which should improve the saleability/lettability.
For example, of the Commercial EPC's completed in 2008 so far the following have
been the most common recommendations made; use more energy efficient lighting,
use more solar control measures (reflective coating/shading devices), introduce electronic controls
to improve efficiency of fluorescent lighting, consider solar water heating, review boiler.
So are any buildings exempt?
Only a few.
The following are exempt: places of worship, buildings that are intended
to exist for less than two years, agricultural buildings and some basic
workshops with low energy demands.
Also detached buildings of less than 50 sq m (550 sq ft) are exempt.
Finally where it can be demonstrated that a building is suitable for demolition
or redevelopment it could be exempt. In this instance the property should have
appropriate planning consents etc or the seller has reasonable grounds to
believe that a prospective buyer intends to demolish the building.
A commercial EPC will not be required for a lease renewal or a lease extension
or surrender or under a compulsory purchase order. 'i.e. transactions that
do not involve a new owner or tenant may not require an EPC'.
What about part-let space and Investment Sales?
Properties that are to be sold as an investment with tenants remaining
in occupation will require a commercial EPC.
The situation with regard to part-let space for example a suite
in an office block is complex. The general rule is 'The EPC must
reflect the accommodation on offer.'
We recommend you ask us to advise on specific instances.
However it may be appropriate in the case of a multi-let office to obtain one EPC for the entire building and then use that for all the suites.
Can the cost of an EPC be re-claimed on the service charge?
This may be possible but is debatable and will as usual depend on the terms of the lease. New leases should deal with this new legislation.
Back to QuestionsWhat about shops with residential above?
If the flat/maisonette is self-contained then a separate domestic EPC is required for the flat (which we can also supply). If it is not self-contained then it will be included in the commercial EPC for the shop.
Back to QuestionsWhat about guest houses?
A guesthouse will require a commercial EPC as it is regarded as a commercial property under the directive.
Back to QuestionsWill the law definitely come in on 1 October 2008?
The legislation is already in place for large buildings and many commercial
EPC's have already been carried out. It would appear that the legislation will
not be delayed or postponed. However, there is a genuine question about the number
of qualified Energy Assessors although a large number are in training.
As the legislation stands it would be a breach of the law to market a
building without a commercial EPC from 1 October 2008. This means that
all existing properties on the books of commercial estate agents require
an EPC before 1 October 2008 throughout England and Wales or they will have
to be taken off the market.
We suspect that between now and October a temporary reprieve will be allowed
stating that providing the agent has instructed an energy assessor then marketing
can continue for a limited period. This is, of course, total speculation based on
government action with Domestic EPC's and commercial EPC's to date.
Why are we having Commercial EPC's anyway?
The greenhouse gas caused by human activity is predominately carbon dioxide.
It is estimated that 50% of all UK carbon emissions come from UK property.
Commercial property (or non-domestic as the government refers to it) accounts
for just under one fifth or 20%.
The UK Government has agreed with The European Union Energy Performance of Buildings
Directive to promote the improvement of energy performance of buildings within the Community.
Each EU member state is required to transpose the Directive into law by the beginning of 2006
with a further three years being allowed for full implementation of specific articles.
This gives the UK until the beginning of 2009.
The UK Government has established its commitment to addressing climate change through
legal instruments. These include the Kyoto Protocol, Energy White Paper, Building Regulations
and Sustainable Development Strategy. The Energy Performance of Buildings Directive is another
implemented in line with these commitments and is where EPC's come in.
The specific laws and rules relating to Commercial EPC's are set out in The Energy Performance
of Buildings Regulations 2007. (Statutory Instrument 2007 No. 991).