News & Insights

Landlords of non-domestic properties with an energy performance certificate (EPC) rating of below band “E” now have only days to improve the rating or register an exemption.

From 1 April 2023, all rented non-domestic property will need to have an EPC rating of band “E” or better.  A failure to achieve this will see landlords face potential fines of up to £150,000 in addition to the possibility of being “named and shamed”.

Current requirements

EPCs confirm the energy efficiency of a building and are rated from band A (the most efficient) to band G (the least efficient).  An EPC is valid for 10 years from the date of issue.

Landlords of non-domestic properties are required by law to ensure that their properties meet the required EPC rating.  Currently, all non-domestic property must hold an EPC rating of band “E” or better prior to any new leases or renewals being granted.

Requirements from 1 April 2023

From 1 April 2023, the minimum EPC rating for any non-domestic rented property must be band “E” or above.  This means that the new regulations will apply to any existing leases, not just newly granted leases.

It will be unlawful for landlords to let or continue to let non-domestic properties that have a current valid EPC rating of band “F” or “G”.

Exemptions

Although the new Regulations apply to all rented non-domestic property (with the exception of those subject to leases of less than 6 months or more than 99 years), there are limited exceptions which do apply if undertaking works to improve the EPC rating are not economically viable or not possible.  Nevertheless, if a Landlord seeks to rely upon an exemption they must apply for and register an exemption.  Exemptions are valid for a period of six months to five years.

There may be other exemptions that apply to your non-domestic premises and we would recommend that you seek advice if you think that your premises is exempt from EPC requirements to avoid any penalties should the premises not fit into any exemption criteria.

Non-compliance

It is important that you comply with the EPC standards.  There are serious penalties for non-compliance in the form of financial penalties and “naming and shaming”.

If you breach the new Regulations for 3 months or less, you may incur a fine of up to £5,000 or 10% of the rateable value of the premises. On the other hand, if your breach has lasted for more than 3 months, you will be subject to a minimum fine of £10,000 and a maximum fine of £150,000.

Future requirements

The Minimum Energy Performance of Buildings (No. 2) Bill (“the Bill”) is set to tighten energy performance ratings even further. Currently, the Bill is at the 2^nd reading stage in the House of Commons.

The Bill is set to elevate the minimum EPC rating for all non-domestic premises to Band B by 2030. This is an important update that all non-domestic property owners should be aware of as the sooner you commit to reducing carbon emissions from your premises, the better placed you will be and ready for the future EPC requirements to avoid penalties.

For further information, please contact one of our Commercial Property experts.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.