New Efficiency Regulations on Landlords
The energy we use for heating and powering our non-domestic buildings is responsible for around 12% of the UK’s emissions. Around 60% of today’s non-domestic buildings will still exist in 2050, representing around 40-45% of the total floor space. Whilst standards to tackle the performance of new buildings have been in place for some time, minimum standards to drive improvements in the performance of the existing stock through energy efficiency upgrades are essential going forward to tackle energy used and reduce emissions across the non-domestic stock. (source Gov.UK)
The Energy Act 2011 imposes an obligation on the government to introduce regulation to improve the energy efficiency of buildings in the domestic and non-domestic private rented sector in England and Wales. A public consultation was carried out between 22 July and 2 September 2014 which sought views from relevant organisations and bodies across England and Wales on the detail of the Regulations.
As a result of that consultation, new regulations will come in to force by 1 April 2018 which will prohibit the letting of Commercial and Residential properties in England and Wales that do not meet the minimum energy performance standards (MEPS).
Under the new regulations a Landlord cannot let a commercial or residential property which has an EPC rating less than E. If a property has a rating below the new minimum standard it would have to be upgraded to meet the minimum before it could be let.
An EPC (Energy Performance Certificate) gives a property an energy efficiency rating which goes from A being the most efficient to G being the least efficient. An EPC is valid for a period of 10 years.
The Regulations only apply to properties which are let under a tenancy. Non-domestic properties which are occupied under other arrangements, for example properties let on licence, or ‘agreement for lease’ arrangements, are unlikely to be required to meet the minimum standard.
The government says it is important that commercial Landlords who intend to let or indeed sublet, need to fully understand the regulations and the impact the changes will have on them as Landlords. With this in mind the Department for Business, Energy and Industry Strategy have produced detailed Guidance for non-domestic Landlords. This Guide can be found at:
In relation to commercial property, types A1-D2 usage are within the scope of the regulations with the exception of those excluded from existing Energy Performance Certificates (EPC).
For residential properties, the new rating is likely to be based on fuel costs whereas for commercial properties the rating is likely to be based on C02 emissions.
What can Landlords do to get ready for the new regulations?
Certain commercial properties will be exempt from the new regulations. The Exemptions Register is currently being piloted and will be available on the government web site by 1 October 2017. However, Landlords who wish to register an exemption for a non-domestic property as part of the pilot should e-mail the BEIS minimum standards team [email protected].
As a Landlord, you can prepare for the introduction of the new regulations by taking the following steps: –
- Obtain a copy of the Guidance booklet from the Gov.UK website (link above)
- Consider registering for an exemption as detailed above.
- Review your property portfolio and check the EPC ratings of those which have a current EPC Certificate.
- Once you have identified the properties that don’t meet the minimum rating of E, establish the cause of the poor rating.
- Assess what works need doing to bring the property up to the minimum standard.
- Seek professional advice on what improvement costs could potentially be recovered through schemes such as the Green Deal Initiative.