Landlords and managing agents of leasehold property need to be aware of the changes to Energy Performance Rating (EPC) standards coming into force from April 2018 and should take action now to ensure that their buildings meets the minimum rating requirements so they can continue to be let penalty free.What are the changes to EPC legislation?
As of 1st April 2018, proposed changes to The Energy Act 2011 regarding EPC ratings on leased property will mean that all new lettings and tenancy renewals on commercial and residential property must be accompanied by an EPC rating of E or above.
If a property does not have a valid certificate or is awarded a lower value of F or G, the lowest energy efficiency rankings available, then it will be illegal to bring it to market or continue the existing tenancy without justifiable improvements being made.
According to the Energy Performance of Buildings Register, around 18% of non-domestic properties have an EPC grading of F or G.
How will landlords and occupiers be affected?
Improving the energy efficiency of a building in advance of the new legislation will reduce the risk of penalties, loss of rental income or a decrease in property value when it comes to renewing tenancy agreements or re-marketing the property.
If the building does not meet the required energy performance rating, the following will be negatively impacted:
- Valuation of the building
- Dilapidation assessments
- The ability to market your property or extend the existing lease
- Rent reviews
Exemptions will apply for certain buildings via a secondary legislation. Examples of this include listed buildings and properties with a short lease defined as less than six months. Further details on all exemptions can be found on the Residential Landlords Association (RLA) website.
What are the penalties?
The Residential Landlord Association (RLA) outline the penalties that will be in place if a property is non-compliant and will be enforced by Local Authorities and Trading Standards.
How can Kempton Carr Croft help you?
The change in legislation is a step forward in making the country’s buildings more energy efficient and to reduce carbon emissions from the property sector.
Understanding and acting upon your responsibilities and obligations as a landlord will ensure that you do not end up with a period where the property is vacant, unable to be let and is losing money whilst works are being completed to improve a sub-standard EPC rating.
Kempton Carr Croft can:
- Arrange an Energy Performance Certificate rating assessment for your leased property
- Advise on, procure and manage the works required to improve the EPC rating
- Market all commercial property with a valid EPC
- Negotiate with landlords or occupiers regarding the completion of energy performance improvement works – including possible lease re-gearing.
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