When epc not required?
It has been a legal requirement now for most properties, commercial and residential, that come onto the market, whether for sales or lettings, to have a valid Energy Performance Certificate (EPC).
In today’s blog, we have a look at what an EPC is, when you need one, and what the consequences may be for a poor finding in the report.
An EPC assesses how energy efficient a property is. This can include anything from the use of energy efficient lightbulbs to insulation and hot water systems. The less energy efficient a property is, the higher the energy bills will be. An EPC also shows the potential score for a property, if the recommended changes were made, and an environmental impact rating.
Most properties, when being sold or let out, need an EPC. EPC’s last 10 years, so they require renewing before a property can be remarketed once the EPC has expired.
In general, all properties both commercial and residential need a valid EPC before being marketed. There are however some exemptions.
From January 2013 there has been an “exemption” for listed buildings. However, the exemption is qualified. It states, “Insofar as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance”. The qualification covers work that might be carried out to the property to improve its energy performance. These are works that would require consent under Part L of the building regulations (The Conservation of Fuel and Power) and would be included in the recommendations section of an EPC report if one was obtained. If such works would unacceptably alter the building’s character or appearance, then the listed building would qualify for an exemption.
In 2016, The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 established the new Minimum Energy Efficiency Standards (MEES) in the residential and commercial private rented sector.
This was introduced by the government to improve the quality of private rented buildings and reduce the overall CO2 emissions in accordance with the UK’s targets for decarbonisation. From 1st April 2018, phase one of the MEES regulations came into force which had big implications for landlords of private rented properties. As a result of this, it is now deemed unlawful to let properties with an EPC rating below an “E” rating.
Landlords and their agents should act by commissioning an up-to-date EPC which will identify the current rating (which may have changed over time), and recommend opportunities for improvement.
There are, however, various exemptions that apply to the prohibition on letting a property with an energy efficiency rating below E.
If a property meets the criteria for any of the exemptions, a landlord will be able to let it once they have registered the exemption on the PRS Exemptions Register.
The six types of exemption that can be registered are:
This exemption can be registered if the property is still below EPC “E” after improvements have been made up to the cost cap (£3,500 inclusive of VAT), or there are none that can be made.
This exemption can be registered if no improvement can be made because the cost of installing even the cheapest recommended measure would exceed £3,500 (including VAT)
This exemption can be registered if the only relevant improvements for the property are:
This exemption can be registered if the relevant improvements for the property need consent from another party, superior landlord, mortgagee, freeholder or planning department, and despite best efforts that consent cannot be obtained, or is given subject to conditions a property owner could not reasonably comply with.
This exemption is registerable if there is evidence showing that making energy efficiency improvements to the property would devalue it by more than 5%.
If a person has recently become a landlord under certain circumstances they will not be expected to take immediate action to improve their property to EPC “E”. They may claim a 6 month’ exemption from the date they became a landlord.
For buildings that are to be marketed for sale or rent, the building's owner or prospective landlord is reponsible for obtaining an EPC.
For newly constructed buildings it is the responsibility of the builder to provide an EPC to the person who commissioned the construction of the building, within five days of completion.
An EPC must be obtained before a building is marketed for sale or rent.
Where an agent has been engaged to sell or to rent out a building, they must include the energy performance indicator from the EPC in all commercial media/marketing material produced for that building. If an owner or landlord is selling or renting out a property on his own behalf, he is responsible for including the indicator on such material. Commercial media includes written particulars, brochures, property websites etc. Advertising boards outside properties would not be considered commercial media.
Yes. The Department of Finance (DoF) and district councils have the duty to enforce the requirements of the EPC regulations. District councils enforce in relation to all but their own relevant public buildings in which case DoF is the enforcement authority.
Failure to comply with the regulations or a request to produce relevant documents from an enforcer may result in the issue of a penalty charge notice.
In the case of a dwelling, the penalty is £200 and for non-dwellings it is 12.5 per cent of the net annual value, for each breach of failing to:
The Northern Ireland Energy Performance Certificate Registers include a search facility to enable you to find an accredited energy assessor in your area.
Technical questions and answers are covered on the Northern Ireland EPC register.
For more information on becoming an assessor including details of available training courses and approved qualifications please see the page on Energy Assessors and Accreditation Schemes.
The price of an energy performance certificate is determined by the market. Costs will vary according to the size, type and location of the property.
The time taken to perform an energy assessment will vary according to the size and nature of the property. This is particularly true of commercial buildings where the wide variations in size etc renders any definition of 'average time' not very meaningful. However, it has been estimated that an average three bedroom semi-detached house would take just under two hours to complete.
For existing domestic properties, the accredited energy assessor must base the assessment on a visit. Where an assessment is based on the assessment of another representative apartment or unit, the accredited energy assessor will need to visit a sample of the apartments or units to verify that they are indeed representative.
In other cases the assessor must visit the property if s/he has any concerns about the data and should expect to do so unless there is good reason not to. You may check your assessors credentials on the Northern Ireland EPC register website before letting them into your home.
This simply indicates the building could be more energy efficient. During the inspection a number of recommendations to improve its energy efficiency will be identified (in the recommendation report which should accompany the EPC). Implementation of these could not only increase your rating and reduce carbon emissions, but also save money on energy bills. However, it is up to you whether you implement the recommendations or not; the Regulations do not impose a legal duty on you to do so.
A higher energy rating should make a building more marketable than one with a lower rating as a more energy efficient building is less costly to run. The recommendation report should provide information that may help to reduce the running cost of the property even further.
No. An EPC is valid for 10 years and can be used multiple times during this period. The EPC will expire after 10 years and a new EPC (valid for the next 10 years) should be produced if the property is marketed for sale or rent at that time.
Yes. It is the responsibility of the seller or landlord offering the accommodation for sale or let to make an EPC available for their building. A lease assignment would be considered to be a sale and the assignor should provide an EPC. The legal view is that it is the tenant, and not the landlord, who is selling their interest in the lease. The tenant effectively bought an interest in the lease when they took on the lease, and through the assignment, they are now selling their interest on.
This will depend on the type of tenancy that has been granted.
If you grant a joint and several tenancy where all the tenants are on one agreement, then this is, in legal terms, no different to letting a normal dwelling to a single family. Therefore, one EPC will be required for the whole dwelling.
Where individual rooms in a building are rented out on separate tenancies and there are shared facilities (eg kitchen and/or bathroom), an EPC is not required. An EPC is only required for a dwelling that is self-contained, meaning that it does not share essential facilities such as a bathroom/shower room, wc or kitchen with any other dwelling, and that it has its own entrance. This is because an EPC is only required on the rental of a building or part of a building ‘designed or altered to be used separately’. Renting a room does not meet the ‘part of a building’ definition. Put simply, an EPC is only required for a habitable unit if it is self-contained.
A house or flat is rented by a number of tenants who have exclusive use of their bedrooms but share a kitchen and bathroom. In this case each tenant has a contract with the landlord for the parts they have access to, but not for the whole dwelling. An EPC is therefore not required each time a tenant moves, although one will be required for the whole house if it is sold or rented as a whole.
A group of friends want to rent a property and there will be a single contract between the landlord and the group for the rental of the whole dwelling (ie it is a joint and several tenancy). An EPC is required for the whole dwelling.
Individual tenants rent rooms in a hall of residence. Each room does not constitute a building or part of a building designed to be used separately. An EPC is not required, for each individual room. However, an EPC will be required on the whole building if it is sold or rented. It will also be required on self-contained units within the hall, for example, a self-contained caretaker’s flat, if this is sold or rented.
For existing domestic properties, the accredited energy assessor must base the assessment on a visit. Where an assessment is based on the assessment of another representative apartment or unit, the accredited energy assessor will need to visit a sample of the apartments or units to verify that they are indeed representative. For new build properties the assessor must visit the property if s/he has any concerns about the data and should expect to do so unless there is good reason not to.
While a team of people can work on gathering the information for a non-domestic energy assessment, they must work under the direction of an accredited energy assessor, and the accredited energy assessor must visit the property to confirm the data before signing it off. Only accredited energy assessors can produce and register certificates.
You will not be required to produce an EPC if:
If you are constructing a building and have notified Building Control of its completion before 30 September 2008, you will not be required to provide them with a copy of an EPC. However you will still be required to provide an EPC to the prospective buyer or tenant.
Rooms for residential purposes such as a room in a hostel, an hotel, a boarding house, a hall of residence etc are not classified as a dwelling and so are excluded from the requirement to provide an EPC on sale or rental. This is because a room for residential purposes is not self contained. However, the building may need a DEC if it meets the necessary criteria and would require an EPC if sold or rented out in its entirety.
The following buildings are exempt and therefore do not require an EPC:
The current energy rating given on the EPC is based on the features of the house was built and any subsequent energy efficiency improvements undertaken eg, additonal insulation. The accompanying recommendation report lists any additional cost effective measures that assessor has identified to further improve the energy efficiency of the house. By carrying out these additional cost effective measures you can achieve your potential energy rating.
Builders tend to get approval for a large number of dwellings on a development and to build them over a number of years. In the meantime, the building regulations thermal requirements may have been improved but the builder is still legally entitled to build to the previous regulations' standards. This means that the new home you buy may not include the latest provisions for the conservation of fuel and power. The EPC shows a benchmark rating for a 'Typical new build'. If the EPC rating for your new home is lower than this figure it is not built to the current building regulations' standards.
The definition of a building in the EPC regulations states that "a reference to a building includes a reference to a part of a building which has been designed or altered to be used separately". Consequently, even though a building is divided into parts (or units), where the building could only be marketed and sold as a single building, then only one EPC will be required. If, however, parts (or units) of the same building are being sold separately, then separate EPCs would be necessary. The critical factor is whether or not each part (or unit) of a building has a separate or common heating system.
In this instance, an EPC must be produced for each part (or unit) based on that part’s (or unit's) energy use; however, provided the parts are identical, this may be based on the assessment of a representative part (or unit) in the same block. Thus, in the case of a building containing several parts (or units) but with, say, four different designs types, then, everything else being equal, four EPCs would be required for that building.
For parts (or units) with a common heating system, an EPC must still be produced for each part (or unit), but it may be based on a common certification of the entire building as a whole.
A care home will need an EPC only on construction, sale or rental as a whole building. (The whole building EPC would be based on SBEM, the method for assessing non-dwellings).
There will normally be no requirement for each resident to obtain an EPC. The home’s accommodation which is provided with attendant services but without a right of exclusive possession of any part of the building would not usually constitute a letting in respect of which an EPC should be made available. Residency of care homes, student accommodation blocks (see example 3 below), hotel rooms and prisons are likely to fall into this category.
Sheltered housing, by contrast, frequently contains self-contained apartments, either let or owned, with common rooms also provided for social and recreational purposes, with use of them also governed by the terms of the lease of the individual accommodation. In this circumstance an EPC would be required for each self-contained apartment when rented or sold.
Where a building has parts (or units) with separate heating systems and a common space, the seller or landlord will be required to provide an EPC for the whole building only if it is being sold or let as a whole. Otherwise the seller or landlord will be required to provide an EPC for each part (or unit) being sold or let plus an additional EPC for the common space. The prospective buyer or tenant can then make their decision on the basis of the energy rating for the part (or unit) and the energy rating for the common space that serves that part (or unit).
For shell and core buildings, such as commercial retail/warehouse units, not all the services will be installed (especially lighting, mechanical ventilation and cooling) at the point where the building is sold or rented out. However, where they will be fitted out and there is an expectation that energy will be used to condition the indoor climate, an EPC should be provided by the builder.
The EPC should be based on the maximum design fit-out specification as used for compliance with Part F of the Building Regulations. (Part F ensures that building work conforms to energy performance standards). Where insufficient information is available (for example, no services have actually been installed), Part F defaults to the 'worst' energy rating allowed under Part F. Therefore the most energy intensive fixed services fit out allowed under Part F will be assumed for the purposes of the EPC.
Any subsequent fit out will, of course, need to comply with Part F of the Building Regulations. Should the owner or tenant choose a more energy efficient specification than that assumed at the point of sale or rent, a subsequent EPC may be requested by the owner or tenant to reflect the actual energy rating of the building. However, there is no legal duty to do so.
Where construction work is undertaken to a building and the modifications
In this article, Commercial Property Solicitor Hannah Martin outlines everything you need to know about EPCs and the upcoming changes to them as well as discussing how you can prepare.
Energy Performance Certificates (or EPCs) are documents which evaluate the energy efficiency of a property and grade it anywhere from an A to a G based on how efficient a property is.
A rating of A is best rating available, with a G being the worst.
EPCs are valid for 10 years and remains valid for all transactions within this period.
When a commercial property is sold, rented or constructed an EPC must be in place. This is a legal requirement.
A Landlord will be required to ensure that a valid EPC is registered against the property for the entirety of a letting.
EPCs are regulated by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.
The regulations aim to reduce the carbon dioxide emission of property’s and ‘call out’ non-domestic properties which are not energy efficient.
Under the current regulations a Landlord is required to provide a valid EPC when granting a new lease of a Property.
This may be granting a new lease to a new tenant or renewing a lease with an existing tenant.
The EPC must have a rating of E or above for the Landlord to be able to lawfully let the property.
From 1 April 2023, a Landlord will not lawfully be allowed to continue any lease over a Property which does not hold a valid EPC rating.
Therefore, landlords should start looking to improve the EPC rating of a property where this is necessary.
The good news for tenants is that compliance with EPC regulations is ultimately the Landlord’s responsibility.
Breach of the regulations will not be sufficient for the landlord to refuse any lease renewal of the property nor will it affect the validity and rights available under any continuing leases.
There are some circumstances where a property may be exempt from requiring an EPC and are not required to comply with these regulations.
These include:
If a Landlord believes that the Property is exempt from the EPC regulations they are required to register this on the Private Rented Sector Exemptions Register to be recognised.
If there has been a breach under the EPC regulations, for example the Landlord has let a Property that has a rating less than E, the enforcement agency have up to 12 months to serve notice of the breach.
The landlord will then be required to undertake the necessary works to the property.
Landlord’s should be aware that failure to comply with the regulations can lead to a penalty of up to £5,000.
A landlord is not able to require a tenant to pay the penalty.
The only liability a tenant faces is if they fail to allow any enforcement agent access to the property when requested without a valid reason to refuse entry.
A landlord would be wrong to assume the costs of putting right a sub-standard property is the tenant’s responsibility or that they can reclaim the costs.
Many leases prohibit a tenant undertaking works to the property even when where they are required to keep the property is good and substantial repair and condition.
If you have any questions following this article, please feel free to get in touch with one of our bright experts.
An EPC is only required when a building is constructed, sold or rented. For a building to require an Energy Performance Certificate is must have a roof, walls and use energy to energy to condition the indoor climate. It should therefore have fixed space heating , ventilation and / or cooling.
Having been requested to undertake a commercial EPC for a run down warehouse building this afternoon it brought to mind the question
At Buildpass HQ we thought it a great opportunity to investigate further.
The requirement for non-dwellings to have an EPC has been phased in since April 2008. If you are selling or leasing a commercial property then under the Energy Performance of Buildings (England and Wales) Regulations 2012 you’re are legally required to provide an EPC free of charge to the prospective buyer or tenant.
An EPC is only required when a building is constructed, sold or rented. For a building to require an Energy Performance Certificate is must have a roof, walls and use energy to energy to condition the indoor climate. It should therefore have fixed space heating , ventilation and / or cooling. The installation of hot water and electric lighting does not mean that and EPC will be required.
As of the 1st April 2018 it will be unlawful to grant new tenancies or leases on commercial properties with an EPC rating of F or G. We will discuss the implication of these new rule in a future post.
You don’t need an Energy Performance Certificate (EPC) if you can demonstrate that the building is any of these:
A building is also exempt if all of the following are true:
