New EPC Regulations for Commercial Landlords in 2025

Sustainability

In 2025, the UK government is implementing stricter Energy Performance Certificate(EPC) requirements for commercial landlords. These new rules aim to improve the energy efficiency of buildings, lower carbon emissions, and contribute to the UK’s goal of net-zero emissions by 2050.

Date
October 22, 2024
Topic
Sustainability

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What Are EPC Ratings?

EPC ratings measure the energy efficiency of buildings, ranking them on a scale from A (most efficient) to G (least efficient). Currently, commercial properties in the UK need an EPC rating of at least an E to be rented legally. However, the new regulations in 2025 will raise this minimum requirement, making it mandatory for commercial properties to meet a C rating or higher.

A push for sustainability

The push for higher energy efficiency in commercial buildings comes as part of a broader sustainability effort by the government. Commercial properties account for a significant portion of the UK’s carbon footprint, and improving energy standards will help reduce this. By enforcing higher EPC standards, the government hopes to ensure that commercial properties contribute less to energy waste and are better insulated, thus lowering overall energy costs and promoting sustainability.

Key impacts for commercial landlords

  1. Cost implications - upgrading properties can be costly. The scope of works could vary depending on the current state of the building, so budgeting and planning for these changes ahead of time will be crucial to ensure compliance and avoiding last-minute expenses.
  2. Lease renewals - from 2025, it will be no longer permitted to renew leases or sign new agreements if the property does not have an EPC of 'C' or above, potentially reducing occupancy rates for non-upgraded properties. Being proactive will be key to maintaining leases.
  3. Increasing property marketability - properties with higher EPC ratings are more attractive to tenants, as they mean decreased energy bills and greater alignment to their own ESG goals. By investing in upgrades, landlords can make their properties more competitive in the rental market.
  4. Penalties - non-compliance could result in substantial fines.

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The upcoming changes present both challenges and opportunities. Landlords who embrace these changes and plan their upgrades in good time will increase their property value and make their space more attractive to tenants. With 2025 fast approaching, considerations must be acted upon quickly to turn the challenge into a competitive advantage.

Would you like to know how we can help you plan for 2025?