Landlords – can you continue to let your buildings?

Are you confident your buildings will meet the coming changes to energy performance rules?

Energy Performance Certificate (EPC) legislation has been in statute since 2008. Since then there has been a progression of increasingly stringent regulations to cajole property owners to do their bit for the Government’s net zero 2050 pledge.

Since April 2018, the UK regulations on EPCs stated that commercial and residential properties had to meet a Minimum Energy Efficiency Standard rating of “E” before they could be let. Since 2020 buildings with existing tenancies had to meet the minimum standard and there are now plans to increase EPC ratings still further.

The MEES regulations make it unlawful to currently let a property with an EPC rating below E, subject to various exemptions, which must be registered online. The Government intends to raise this minimum and is currently consulting on how to implement this, so there is still uncertainty there.

There was a change with effect from 1 April 2023 for let commercial premises, such that the current prohibition on new lettings of sub-standard, non-domestic properties is now extended to the continuation of existing tenancies of a sub-standard, non-domestic (commercial) property.

Some confusion about the rules

The complexity of the rules and some changes in Government policy have led to a somewhat confusing situation where landlords don’t always know where they are going on this. Many are worried about the costs involved and how they are to deal with upgrades with tenants in situ.

Robinson & Hall, Land and Property Professionals since 1882, a commercial practice, offer a whole range of residential and commercial property services including renewable energy, architecture and building surveying consultancies. They are attempting to bring some clarity to this situation.

The practice is concerned that landlords / property owners are not all fully aware of their buildings’ requirements for energy efficiency (EPC rating) in the near future. The firm is busy spreading the word and preparing their clients for the coming enhancements to the regulations that might limit the ability of property owners to let their buildings.

The practice, in doing so, has produced a useful summary of the current and expected future legislation detailed in the chart below below. The items highlighted in yellow are not yet set and are pending Government announcements.

[Source: Robinson & Hall]

In March 2023, Grant Shapps MP announced that the residential enhancement of EPC for new leases would be pushed back to 2028.

This is in-line with the target date for implementing enhanced EPC of Grade “C” for continuing leases, which gives property owners five years to consider how they could improve the energy efficiency of their properties.

This announcement will give some respite for residential property owners. But it is proposed that all commercial properties, even those not triggering the need for an EPC, will be required to have a lodged EPC by April 2025.

This move may have big implications as the requirement for a minimum energy efficiency of Grade “C” for all new and continuing leases is expected in April 2027.

There are exemptions that may be applicable. If you are unsure whether you comply, or if you need assistance in checking an exemption or are carrying out works to improve the performance, then firms like Robinson and Hall will be pleased to assist.

The requirements for EPCs and the MEES legislation is now influencing the quality of properties and many landlords are making the most of any void periods to get ahead of the game to start moving towards more efficient buildings. They need to comply with the new rules and also meet modern occupancy requirements post-Covid so that they will let easily in the current economic climate.

Robinson & Hall have recently been involved in a number of schemes to make improvements to energy efficiency in buildings:

• A former vaulted roof chapel building was insulated and a new heating system installed to achieve a B rating for a commercial office.

• A 1960s factory and office in Bedford was re-roofed to incorporate insulation, efficient heating was installed and insulation injected into the cavity walls – predicted to achieve a Grade B.

• Twin skin roof system with spacer bars and fireproof insulation to a factory roof in Bedford.
• An office barn conversion received upgrades to heating and service provision to achieve a Grade A.

• A private dwelling was upgraded from a Grade E to an anticipated Grade B by installing a ground source heat pump, underfloor heating and additional insulation. The client obtained a £6,000 grant under the boiler upgrade scheme from the Government.

• A ground source heat pump and plant room installed for private residential property.

Robinson & Hall says: “be careful not to rely on old EPC information as the calculation methods have changed and the accuracy has significantly shifted.”

It is important that the correct upgrades and installations are used in order to effectively reach the desired EPC rating, and to make the property more desirable and far easier to let.

If you have a poorly performing property that’s difficult to let, has long void periods, then a detailed assessment is probably needed by property experts to asses the building’s future viability.

Perhaps now is an ideal time to look at upgrades that would improve energy efficiency and have the building reach modern occupancy standards.

robinsonandhall.co.uk

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