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Motor Trade Legal News

Energy Performance Certificates: England & Wales

It’s been coming for some time now but from April 2018 any non-domestic property let out will need to have a minimum energy performance rating of E on an Energy Performance Certificate (EPC).

The regulations will come into force from 1st April 2018 for new lets and renewals of commercial tenancies and from 1st April 2020 for all other tenancies. It will be unlawful to rent a property which breaches the requirement for a minimum E rating

An (EPC) rates how energy efficient your building is using grades from A to G (with ‘A’ the most efficient grade). Figures suggest that approximately 35% of properties surveyed between 2008 and 2015 were achieving an E, F, or G rating.

As these regulations form part of the devolved administrations responsibilities we will look at the application of these in each country, starting with England & Wales

England & Wales

The Energy Act 2011 defines a non-domestic property as:

  1. is situated in England and Wales,
  2. is let under a tenancy, and
  3. is not a dwelling

This is quite a wide definition and is likely to cover all commercial property types from A1 – D2 usage classes unless except.

Exemptions

You don’t need an Energy Performance Certificate (EPC) if the building is:

  1. listed or officially protected and the EPC requirements would alter the building to an unacceptable degree
  2. it is a temporary building which will be used for less than 2 years
  3. it is a place of worship, or other religious activities
  4. an industrial site, workshop or non-residential agricultural building that doesn’t use much energy
  5. a detached building with a total floor space under 50 square metres
  6. due to be demolished by the seller or landlord

How will it affect my tenancy?

This is still, unclear. The most important factors will be:

  1. Whether the Landlord and Tenant Act 1954 is excluded from the lease
  2. Who is liable for dilapidations and property maintenance.

The Landlord and Tenant Act 1954

The Landlord and Tenant Act 1954 governs the rights and obligations of landlords and tenants of premises which are occupied for business purposes.  Where applicable the Act guarantees that the tenants have the right to stay in the premises at the end of their tenancy; and to also apply for a new lease to be granted.

There are only limited rights of cancellation under this Act. It is likely that the landlord would only be able to use a failed EPC rating where:

  1. The tenant was responsible for the maintenance of the building and had failed to maintain it
  2. That suitable alternative property was offered
  3. Where the landlord intended to demolish the building

However, who will be responsible for the upgrades required cannot be determined at this time.

Conclusion

As this will only apply for new and renewed tenancies from 1st April 2018, where your lease was either started, or was renewed before 01 April 2018 you will have either the balance of any tenancy or until 1st April 2020 to deal with any EPC issues.

The issue will be where commercial landlords attempt to use a failed EPC as grounds to end a lease. What will happen will be determined by your lease and as such you will need to have this reviewed in the event of a dispute.  Only one thing can be guaranteed and that will be that any such dispute will be very difficult to deal with and you will need to obtain legal advice at the earliest opportunity. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance.

Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.