Commercial Property

Hemant Amin, a commercial property specialist at solicitors, Charles Lucas & Marshall, says a large majority of commercial property owners and landlords are risking fines for breaching energy performance regulations.

Energy Performance Certificate

An Energy Performance Certificate (EPC) is a certificate to grade the energy performance of a property on a scale from (A) very efficient to (G) least efficient.

Since 1 October 2008 an EPC has been required for the sale or lease of commercial property. This includes the transfer of a lease and grant of a sublease.  There are few exemptions so most transactions fall within the regulations.

For transactions within the regulations the seller or landlord must produce an EPC to a buyer or tenant by whichever of the following events occurs first:

•    the seller or landlord provides written information about the property to a person who has requested information
•    a prospective buyer or tenant views the property;
•    a contract is entered into to sell or rent out the property

However, in a recent survey carried out by the National Home Energy Rating Scheme (NHER) it was found that 81% of commercial properties were in breach of EPC regulations.

There are financial implications for failure to provide a valid EPC.  Trading Standards are responsible for enforcement and can, within the period of six months from expiry of the period in which it should have been initially produced, ask the seller or landlord to produce a copy of the EPC.

Failure by the seller or landlord to produce the copy EPC within seven days shall result in a fixed fine of £200 unless the seller or landlord has a reasonable excuse eg, was on holiday or suffering from illness during the seven day period.

If the seller or landlord has failed to commission an EPC or if a copy is not produced to Trading Standards within the seven day period without reasonable excuse, then Trading Standards can issue a penalty notice provided that this is done within the same six month period.

In such circumstances, the penalty is 12.5% of the rateable value of the property subject to a minimum amount of £500 and maximum amount of £5,000.  If the property has no rateable value then the fine is fixed at £750.  To what extent Trading Standards are policing EPCs is currently uncertain.

A penalty notice must be withdrawn if the seller or landlord can demonstrate that he took all reasonable steps and exercised all due diligence to avoid breaking his duty to make an EPC available.

Sellers and landlords should also consider that in addition to the financial penalty for failure to prepare an EPC, there may also be potential damage to market value and rental yield of the property.

For more information contact Hemant Amin on 01635 521212 or hemant.amin@clmlaw.co.uk

Solar Farming

Solar farming is now becoming established as a means of revenue for farmers. One of my land contacts already has several deals under way and I have been looking at the terms on offer from those who intend to solar farm.

The documents usually consist of an option to take a lease if planning permission is granted, an agreed form of lease together with a grazing agreement. The operator accepts the obligation to obtain the planning permission and then agrees to enter into a form of lease. The payments for the option vary as do the terms of the lease but they are reasonable and will undoubtedly bring in good revenue to the farmer. This seems a good method of diversification without much effort from the farmer.  I wonder how long before one of the farming community in the Archers are involved in this sort of arrangement?
As a method of acquiring an alternative source of energy I would have thought this has benefits to all concerned not least those paying for electricity. Solar farms seem to have benefits over wind farms in that they are less obtrusive on the vista and certainly less intrusive as to noise.  Added to that I am yet to see any suggestion that being in close proximity to them is potentially dangerous, as apparently are power cables. No doubt that hare will be raised at some point

Are there any down sides to this enterprise are there any traps for the unwary? As ever it is the detail that can catch out the farmer.  Here are a couple of points that need careful consideration.

a) Can the use of the solar farm be intensified without the farmer getting an increase in rent?
b) Can the farmer get the land back at the end of the lease and if so in what condition
c) Just how obligated is the operator to get the necessary planning permission

Assuming that the farmer can get the documentation right then he seems to be, as they say, on to a good thing.

I went on holiday in September with the promise from various clients that their land deals were progressing and came back two weeks later bronzed by the Marrakesh sun, refreshed and having honed my negotiating skills by haggling over taxi prices and the like to find what?
Not a lot. The clients are all nervous and certainly sitting on their hands. The banks are out trying to lend, as long as there is absolutely no risk and they have security that is not only belt and braces but also the trousers as well.

So what does a commercial property lawyer do? He turns to his second string of planning advice. There is still work in this area particularly relating to certificates of lawful use and enforcement issues. Certificates of lawful use seem to be an area which is now much considered. Why one asks oneself?  I suspect it is because the planning process is in such a muddle, with thanks to Mr Pickles, that people are turning to the idea of getting some basic position secure so that they can then try and move to their real objective knowing that the local planning authority cannot take away the base position. A certificate of lawful use is relatively easy to obtain, provided that the applicant completes all the necessary boxes and forms. The case is one of fact and not subject to the vagaries of the views of planning officers and the planning committee. Has the use been continuous for 4 or 10 years?  If so, the certificate must be granted.

I know there have been some high profile cases involving secret development which have fallen foul of the procedure but these are rare and, from what I read, deserved to fail .