A Guide for Landlords: Understanding, and steps to improve EPC Ratings of Commercial Property

As sustainability and energy efficiency continue to gain importance in today’s world, various measures have been implemented to encourage responsible energy usage. One such initiative is the Energy Performance Certificate (EPC) rating system. This blog aims to shed light on EPC ratings for commercial properties, including the recent updates to the EPC laws in April 2023, their impact on landlords, and the steps needed to achieve the 2030 energy efficiency goals.

What are EPC Ratings?

EPC ratings are assessments of a property’s energy efficiency. These ratings are based on factors such as insulation, heating systems, lighting, and renewable energy sources. EPC ratings are depicted on a scale from A+ (most efficient) to G (least efficient). They provide an indication of a building’s energy performance, highlighting areas for improvement and potential energy savings.

Recent April 2023 Laws on EPC Ratings

In 2018, some Minimum Energy Efficiency Standards (MEES) regulations were introduced, stating that buildings with new tenancies must achieve a minimum EPC rating of E before they could be let out to new tenants. As of April 2023, these regulations have extended to apply to all existing leases.

Furthermore, the MEES are set to tighten further, with a minimum EPC C by 2027, and EPC B by 2030.

What does this mean for Landlords?

These new April 2023 regulations dictate that landlords must improve their energy efficiency to comply, and failure to meet these standards will result in potential fines of up to £150,000 and the inability to rent out the property legally. Consequently, landlords need to consider energy efficiency improvements as a priority to attract tenants and avoid non-compliance.

There are some exceptions to these including where leases are for less than 6 months, or longer than 99 years, as well as where works to improve the rating are impossible or not economically viable. In these scenarios, landlords should apply for and register an exemption.

Steps to achieve the 2030 Goals

The UK government has set an ambitious goal to achieve a net-zero carbon emission economy by 2050. The aim to improve energy efficiency in commercial properties by establishing a minimum EPC rating of B by 2030 is part of this commitment. To achieve this goal, landlords can take the following steps:

  • Check what EPC rating your property is. If unsure, obtain an EPC assessment to ensure it rates band ‘E’ or better
  • If the rate is not E or better, check whether you have the right access to and undertake the work under the current leases
  • Seek advice from consultants or sustainability consultants who specialise in commercial properties to obtain valuable guidance about your specific property
  • Investigate both local and governmental schemes and initiatives that provide financial incentives, grants and support for energy efficient upgrades to help offset the cost
  • Implement energy-saving measures such as installing energy-efficient lighting, improving insulation, upgrading heating and cooling systems, and exploring renewable energy options. Check the terms of leases to establish whether any incurred costs from these works can be recovered from the tenants
  • Ensure there is a programme of proper and regular maintenance of energy-related systems within your property. This will help identify issues, optimise energy consumption and maintain or improve the EPC rating

In conclusion, EPC ratings play a vital role in promoting energy efficiency and reducing carbon emissions in commercial properties. Landlords must be aware of the most recent regulations that came into play in April 2023, as non-compliance can have significant financial and legal repercussions. By taking proactive steps to improve energy efficiency and working towards the 2030 goal of a minimum EPC rating of B, landlords can enhance their property’s value, attract tenants, and contribute to a sustainable future.

Call Daniel Byne to discuss the impact of EPC ratings on your building

07990 080 303 daniel.byne@woodhouseworkspace.com