What is an EPC - Your Complete Guide
Published: 25th May 2023
Section 1: Introduction to EPCs and their Importance
An EPC is an Energy Performance Certificate that assesses the energy efficiency of a given building. These are provided in a grade from A-G based on a sliding scale. They are important to understand for commercial landlords, as the government begins to bring more importance to the use of an EPC.
Section 2: EPC Regulations and Requirements
An EPC is the rating of the building's efficiency, which considers factors including the type of structure, insulation, light sources, heating/cooling sources, etc. Under current MEES regulations, each property must be rated E or above to be legally lettable. Previously, the rulings only included this requirement for new lettings or lease renewals; events where there was an end to a previous lease and the beginning of a new one. This meant that if a property was already let and had a rating of an F or a G, this wouldn't become a particular issue until either of the aforementioned events occurred. Now, however, this applies to existing leases as of 1st April 2023, essentially encapsulating all commercial leases.
Section 3: Exemptions and Grey Areas
There are, as you would suspect, some exemptions to the requirements of EPCs. These are:
The building is listed or officially protected, and the works required to gain a satisfactory EPC would unacceptably alter the building.
A temporary building that is only going to be used for 2 years or less.
Place of worship.
An industrial, workshop, or non-residential agricultural site that does not use a lot of energy.
A detached building with a usable floor area of less than 50 square meters.
Due to be demolished by the seller or landlord with all the relevant planning and conservation consents in place.
These exemptions do provide some grey areas and allow for debate between property owners and the authorities as to why their buildings may qualify for an exemption. For example, what is the determination for "does not use a lot of energy"?
Section 4: Additional Information: Multiple Let Areas and Recommendation Reports
A commercial property that comprises multiple separately let areas has to have an EPC for each demise, rather than one EPC for the whole building. This is because the tenants may not necessarily have the same heating and lighting elements, for example, as it is likely that they each had their own individual fit-outs and requirements for the operation of their given businesses.
An EPC certificate is also given alongside a Recommendation Report, which outlines some potential works that would improve the rating of the property. These are categorized into the potential impact of the improvement they will provide and also between the payback time. This means how quickly the improvements would pay for themselves, which helps assess which improvements are the most efficient to carry out.
If you are a landlord and need help navigating the maze of EPC's then get in touch and we'd be delighted to help and discuss our property management services.