Energy Performance Certificates - finally getting some bite?

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Energy Performance Certificates - finally getting some bite?

Energy Performance Certificates ("EPCs"), which are almost always required when a property is sold or let, are mostly seen as little more than an administrative burden.  Most people, be they professional developer or private seller, see no reason for their existence.  It now looks likely that EPCs will finally have some relevance to property transactions.

The future

The Government has recently announced, as part of its energy efficiency drive and commitment to reducing energy usage, that by 2018 the letting of properties with poor energy efficiency is to be prohibited.  In essence, they will set an EPC standard that any property needs to comply with before it can be let.

As ever, the devil will be in detail and it is far from clear as to:

• What the minimum energy rating will be.
• Whether there will be specific exemptions for listed buildings or, simply, old buildings.
• Whether there will be a government backed loan or grant scheme to enable property owners to upgrade the energy efficiency of their premises.  Who will qualify?
• What the penalties will be for property owners who fail to upgrade their premises to make them more energy efficient.
• Whether there will be any exemptions for transactions such as 1954 Act lease renewals.

As 2018 is at least one General Election away, much can happen in the interim.  However, as EPCs can be valid for up to 10 years, perhaps it is time we  paid more attention to the results to make sure that the rating is correct.

Now

Whilst this fundamental change to the rationale for EPCs is some way in the distance, you should note that from 6 April 2012 the EPC rules and regulations have been tightened regarding the compulsory nature of the regime.  The onus is now placed upon property owners to put an EPC in place before they start marketing the property.  The previous exemptions for the delayed production of EPCs have been narrowed and a maximum period of 28 days from marketing now applies.  Marketing agents must also now check whether EPCs already exist before they start the marketing process.

As a quick reminder, EPCs are not the only certification required, with air conditioning reports also being necessary and which form an element of the EPC.  These tend to be a more technical affair and take longer to produce than a plain EPC, especially if access to the equipment is not straightforward.

Gary Pickard, Director, in Real Estate at Field Fisher Waterhouse LLP.