Warning issued for all commercial landlords and tenants

On 1 April 2018 new regulations come into force which will make it illegal to let, renew or extend a lease of a commercial property with an EPC rating of F or G. This regulation will also apply to domestic buildings from 2020, warn commercial property consultants, Hartnell Taylor Cook LLP.

The new regulations, introduced by the Energy Efficiency Regulations 2015, are targeting buildings that are poorly constructed in terms of energy efficiency and, therefore, have a high impact upon the environment. The Energy Performance Certificate (EPC) ratings were introduced in 2013 and every building built, sold or rented since 2008 has had to be certified, providing a classification between A (the most energy efficient building) to G (the poorest performing building).

Buildings with a classification of F and G are no longer considered suitable for occupation and any landlord or tenant looking to let/renew or extend a lease on a property with an EPC classification of F and G will not be permitted to do so and, therefore, the accommodation will have to remain vacant until the premises have been upgraded and fulfil the requirements to obtain a classification of E or above. It is also anticipated that the legislation will be extended to include those with a classification of D and E in due course. This will impact on both landlords and tenants and will affect the investment values of buildings that do not comply.

Any landlord or tenant who tries to ignore the new regulation could find themselves having to pay a penalty, of up to a maximum of £150,000, which will be based on the rateable value of the building.

Jack Bonnick of Hartnell Taylor Cook LLP’s Project & Building Consultancy team said: “Nearly 20% of buildings fall within the F and G classification and we urge landlords and tenants to look carefully at their portfolio and implement the appropriate works as soon as possible to improve the buildings’ rating to C or above if they wish to maintain its value and marketability.

“There are some exemptions but there is not a simple guide and therefore professional advice is strongly recommended on whether or not this will apply to your building and if so what steps you should be taking now.”