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Helen Washington

From 1 April 2018, section 49 Energy Act 2011 changes would make it unlawful for a landlord to let or lease a residential or commercial property with a poor EPC rating in England and Wales. The Regulations will apply to new lettings granted on or after 1 April 2018.

With nearly 75,000 commercial properties having EPC certificates rated F or G and a further 65,000 with an E certificate, these changes will have a dramatic impact on levels of investment in the energy efficiency of the existing buildings.

These changes are expected to increase awareness of energy-related issues and it is likely that buyers and potential tenants of poorly rated properties will have greater regards to the potential cost of compliance before committing to transactions.

There are some points that we need to know about the changes:

•  The changes could have significant implications for landlords, and for occupiers who wish to assign or sublet property;
•  Both Residential and Commercial EPCs will be affected within the private rented sector, as it will be unlawful to let out the property to a tenant, should the property not meet these new minimum EPS requirements;  
• The minimum energy efficiency for residential and commercial properties will be set at an E EPC rating; The EPC Regulation changes are mainly about the energy efficiency rating of properties and mean that a rating of F or G could potentially cause problems;
• The new EPC Regulations will require eligible properties to be improved to a specified minimum standard. All commercial property types from A1 - D2 usage class are in the scope of the regulations, with the exception of those excluded from existing EPC regulations;
• The regulations will only apply to properties where there is an EPC;
• Leases of less than 6 months or over 99 years will be exempt;
• A penalty will be imposed where the letting prohibition would be breached (a minimum penalty will be £5,000).

Overall, EPC legislation is only the start in the government’s mission to improve energy efficiency in buildings. The regulations will help to work towards the UK’s legally binding target to reduce greenhouse gas emissions by at least 80% below 1990 levels by 2050. However, there are some unanswered questions regarding whether an EPC is the right model to use to drive energy reduction in buildings.

 For further details please contact Helen Washington on h.washington@wjclaw.co.uk