Minimum Energy Efficiency Standards for Commercial Buildings

The Government has at long last published a consultation on minimum energy efficiency standards for non-domestic buildings. The Energy Act 2011 places a duty on the government to impose minimum energy efficiency standards for commercial buildings by no later than 1 April 2018. If a building fails to reach the set minimum standard, then it may not be let. However, the relevant section of the Energy Act has not yet been brought into force, and some in the property industry believed the requirement would never be implemented. But the publication of a consultation paper indicates that the government does intend to implement the legislation.

The consultation can be found here. It confirms that the minimum EPC rating for letting a building will be E and therefore if a building has an EPC rating of F or G, the landlord will be required to do works to bring the building up to an E rating before it can be let.

The consultation paper runs to 40 pages, but some of the main points are:

  • The minimum standard regulations will mirror the trigger point in the EPC regulations, so that where a letting triggers a requirement to obtain an EPC, it will also trigger the minimum efficiency requirement. It seeks views on whether there should be a minimum lease term of 6 months and a maximum lease term of 99 years for the regulations to apply.
  • Where the property needs works to bring it up to the minimum standard, the government is proposing that the landlord would only be required to make those improvements which could be made at no upfront cost, for example through a Green Deal or other finance arrangement.
  • No works would be required where they would result in a material net decrease in the building’s value.
  • An exemption would apply where necessary third party consents could not be obtained, for example from a mortgagee, superior landlord or tenant.
  • It is proposed that the regulations be brought into force on a phased basis, starting with new lettings and lease renewals from 1 April 2018, with an absolute requirement relating to all lettings from 1 April 2023.
  • Enforcement would be the responsibility of Trading Standards Officers, who would be able to impose a fine, probably based on the rateable value of the property.

The consultation period expires on 2 September 2014.

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