As a result of Government concerns that Energy Performance Certificates (EPCs) were not being provided soon enough, changes to the regulations relating to EPCs require them to be provided earlier than previously. The changes came into effect 6 April 2012 Agents need to know that they have direct liability under the new Regulations and that the EPC must now be commissioned before marketing.
More important, though, are the changes that will mean that in the future, buildings with the lowest grading of EPC will no longer be lettable.
Here we summarise the immediate and longer-term changes to the EPC regulations.
Remember, not all buildings need an EPC as the Regulations only apply to buildings with heating, ventilation or air conditioning.
For those buildings that do require an EPC, the new Regulations require that –
- The EPC is commissioned before marketing
- The owner of the building uses reasonable endeavours to obtain the EPC within seven days of the property being put on the market
- The particulars of the property include the first page of the EPC (not just the asset rating), which means that the main recommendations for improvements to energy efficiency will show up in the particulars
- A full copy of the EPC must be provided to the buyer or tenant as early as possible, and the Regulations no longer provide the comfort that in any event this may be just before the sale/lease
Agents beware! Agents for the property owner will be liable themselves for any breach of the Regulations and have a duty to check before marketing that the property owner has commissioned the EPC. The Government guidance states that agents should satisfy themselves that the EPC is available or has been commissioned before they start marketing.
If the EPC is not available within the seven-day period, there is a 21-day period to try to obtain the EPC. The breach of the Regulations occurs if no EPC has been obtained within 28 days of the property going on to the market.
The penalty regime remains unchanged, so for commercial real estate, the minimum penalty is £500 and the maximum is £5,000, and enforcement is by way of a Trading Standards Officer’s penalty notice. The hassle resulting from non-compliance may, however, be worse than the financial consequences.
Good news – if your building was on the market before 6 April, then you are still operating under the old regime and not the new.
Of long-term significance is the change set up by the Energy Act 2011. From April 2018, it will be unlawful to rent out a residential or business property that does not reach a minimum energy efficiency standard (expected to be EPC rating ‘E’). The building will still be capable of being sold, but this change will provide a commercial incentive to make the EPC rating and the recommendations for improvements more significant. Landlords have time to review their EPC ratings and schedule upgrades before new lettings are required, but forward planning will be needed to avoid issues relating to value and marketability over the next five years or so.