Don’t Forget Your Energy Performance Certificate

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A penalty notice must be withdrawn if the seller or landlord can demonstrate that he took all reasonable steps and exercised all due diligence to avoid breaking his duty to make an EPC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