| Since 1 October 2008 any building sold, let or constructed has needed an Energy Performance Certificate (EPC), unless it was put on the market before that date. Thanks to a recent amendment, properties put on the market before 1 October now have until 4 January 2009 to provide an EPC. This impacts on three categories of property. Since 1 July buildings with a floor area exceeding 2,500m² have needed an EPC when sold, let or constructed. However, for those put on the market before 1 July a period of grace was granted until 1 October. This has recently been extended until 4 January 2009. The same has applied to buildings larger than 10,000m² since 6 April, though if they were put on the market before this date then again, a period of grace was granted until 1 October. This too has been extended until 4 January 2009. From 1 October those with a floor area smaller than 2,500m² have needed an EPC. If they were marketed before that date, they have until 4 January 2009 to obtain one. The assignment of an existing lease to a different party also triggers the need for an EPC, unless one is already in existence for the property. Residential and commercial buildings – whether shops, offices, factories or workshops – need one, unless they qualify for exemption (exemptions are outlined later on). In some instances business owners will need a separate EPC for any residential accommodation attached. What is an energy performance certificate? AN EPC gives prospective buyers or tenants information about the energy efficiency of the building they’re buying or renting. A Europe-wide initiative it is part of an ongoing government programme to reduce the UK’s carbon footprint. Based on the carbon emissions the building is likely to produce, an energy rating from A to G is given, with A being very efficient and G the least efficient. All EPCs come with a recommendation report, which includes suggestions for using the building more efficiently and improving its energy efficiency, and indicates how long it will take to recoup through energy savings any outlay made. Is there a legal obligation to act on the recommendations made? No. “Ultimately,” says Tweedie Brown, deputy chairman of PSG Solutions, which carries out EPCs, “people will have to start improving the energy efficiency of the premises.” But for now, businesses will take it seriously because of self-interest, regardless of the environmental benefits. “There is actually a commercial driver,” says Brown, “because if you’ve got energy efficient premises, your overheads will be lower. “Energy and commercially aware companies are doing it anyway. I’m told that Tesco does it, quite apart from any legislation, to keep their overheads down.” If owners produce an EPC well in advance of a sale they can act on the recommendations report and make the business more saleable. And buyers can factor into their investment decision the ongoing energy costs of the building. Who is responsible for producing an EPC, who do they give it to, and when?
The landlord, seller or, if it’s a new building, the party who constructed the building, is legally responsible for providing an EPC, regardless of whether an agent acts on their behalf. The certificate should be given to the prospective tenant or buyer at the earliest opportunity and no later than when a viewing is carried out, when written information is provided about the building, or in any event before entering into a contract to sell or let. If it’s a newly constructed building or an existing building is modified, the party responsible for construction or modification has to give the owner an EPC and recommendations report before building control will produce a certificate of completion. How do you obtain an EPC? As soon as you think you might sell or let your property you need to arrange an energy assessment by a properly accredited assessor. Certain large companies, such as PSG Solutions, surveyors, estate agents and energy suppliers carry out energy assessments. Check the ‘useful links’ in the right-hand column for accreditation schemes, which maintain a list of members and can direct you to one in your local area. Governement-approved energy assessors, not the seller, landlord, or agent, lodge EPCs in the national register. What does an assessment entail? Information is collected and collated about the building’s uses, dimensions, number of floors, amount and type of glazing, lighting, heating systems, fuel used and thermal efficiency of floors, walls and ceilings. Landlords and owners are given a copy of the EPC, which will have a reference number. The EPC is accessible on the register by providing this reference number. How long is an EPC valid for? EPCs for non-dwellings are valid for 10 years, although it might be worth doing a new energy inspection sooner if you install new heating and air conditioning systems, improve insulation or similarly improve energy efficiency. How long does it take? Tweedie Brown says that if the building owner has records of heating bills and the building plans then the assessor can do it “quite quickly” if they “know all this before they go.” He adds: “If it’s a shop it can be often be done in two hours. If it’s a factory it’s going to take a lot longer. Some premises can take weeks. Business retail parks will take four or five weeks.” What if you only own part of the building? If the whole building shares one heating system then it needs one EPC and this can be used for any part of the building sold or rented. If it has separate parts with separate heating systems then an EPC should be made for any part offered for sale or let, although the EPC can be based on another part with a similar system. If a building has a common heating system and you own part of it, then the head landlord is obliged to provide an EPC for the whole building if you ask him. What if there is a residential area, such as a flat above a shop? That depends on whether there is a separate access area from which to access the shop and the flat. If there is, then the dwelling should have its own EPC. If the dwelling is only accessible through the non-dwelling (for example, if you have to go through a newsagent to reach the flat above), then one EPC can cover the whole premises. What are the penalties for not having an EPC? If a trading standards officer requests an EPC for a building constructed, sold or let and the responsible person does not provide it within seven days then they will be liable for a penalty charge notice. Failure to provide an EPC to a tenant or buyer will usually result in a penalty of 12.5% of the rateable value of the property. Are there any situations where a landlord or seller can get dispensation for not providing an EPC in time? They will not be subject to a penalty charge notice if they requested an EPC at least 14 days before it was required and they made reasonable efforts to obtain one. However, they are still obliged to make it available as soon as they can.
This applies to a rental if the tenant has to move in an emergency, the landlord did not have a valid EPC at time of letting, there wasn’t enough time to get one before letting, or if the landlord provides an EPC as soon as is reasonably practical after letting. Are there any exemptions? Places of worship, such as churches or mosques, buildings with a planned time use of less than two years, standalone units with a total useful floor area of less than 50m² and buildings due to be demolished. Buildings which do not require the indoor climate conditioned, such as warehouses or those which house forging and other hot processes, food and drinks packaging or heavy engineering, are also exempt. Non-residential agricultural buildings that are heated for only a few days a year are usually exempt too. An unfurnished building without any heating or air conditioning services will still need an EPC if it has gas or electric meters, as these indicate an intention to condition the climate. Lease renewals or extensions, compulsory purchase orders and lease surrenders do not trigger the need for an EPC. An EPC does not have to be provided if the seller or landlord has reasonable grounds for believing that the buyer or tenant is unlikely to have sufficient funds or doesn’t have a genuine interest in buying or renting the building. They also don’t have to provide one if they are unlikely to sell to the prospective buyer. What should business brokers be doing to help their clients?
“Brokers, I would say, have a professional obligation to tell their clients that their lawyers are the ones who must make sure that they can comply with the law,” says Brown. “Any responsible broker should be advising their clients” of their obligations regarding the provision of EPCs on buildings they are selling or letting. Regardless of whether you are thinking of selling or letting, Brown suggests that “it would be good practice to get it done – it lasts for 10 years and it’s one less thing to worry about.” This article was written with the assistance of Tweedie Brown CBE, deputy chairman of PSG Solutions. | 
