Energy Performance Certificates - business properties

Introduction

Energy Performance Certificates (EPCs) are required when any building is sold, rented out or constructed, and sometimes after refurbishment work. EPCs give information on a building's energy efficiency in a sliding scale from 'A' (very efficient) to 'G' (least efficient). A recommendations report setting out how the rating could be improved accompanies every EPC.

Only accredited energy assessors can produce EPCs for business premises. They analyse how buildings are constructed, insulated and serviced, and the type of fuel being used. If you are choosing a property from which to run your business, comparing EPCs can help you find the most energy efficient premises.

When an Energy Performance Certificate is needed for business property

Energy Performance Certificates (EPCs) are issued by energy assessors belonging to a government-approved accreditation scheme. EPCs quantify a building's calculated potential energy performance in the form of an 'asset rating', which is presented in a form similar to the system used to rate white goods - such as fridges and washing machines.

If you are buying or renting business premises, looking at EPCs enables you to consider energy efficiency and potential energy costs.

Prospective buyers or tenants must receive an EPC before they buy from a seller, let or sublet. Owners of newly built or refurbished business property must receive an EPC before they accept a property from a builder.

EPCs are needed for buildings with multiple tenancies and let for different uses, with a mixture of retail, office and/or residential accommodation.

EPCs are not needed for:

• lease renewals or extensions
• compulsory purchase orders
• sales of shares in a company where buildings remain in company ownership
• lease surrenders
• temporary buildings with a planned time of use less than two years
• standalone buildings with a total useful floor area of less than 50 metres squared that are not dwellings
• industrial sites, workshops and non-residential agricultural buildings with low energy demand

Selling or letting an existing business property

For the sale or rent of an existing property, it is the owner or landlord who is responsible for providing an EPC to any prospective buyer or tenant. This should be done no later than the day on which a viewing is carried out, or written information is provided about the premises. An EPC must be provided when a contract to sell or let premises is arranged - at the very latest.

Existing occupiers and tenants will not require an EPC unless they sell, assign or sublet their interest.

When letting business premises, the number of EPCs will vary according to the use and tenancy arrangements of each building.

Newly built or refurbished premises

When constructing new buildings, or carrying out certain types of refurbishment or modification work, it is the person responsible for construction - usually the builder - who must provide an EPC.

What an Energy Performance Certificate contains

Energy Performance Certificates (EPCs) provide ratings for all types of buildings, showing their energy efficiency based on factors such as:

• the age and layout of the property
• the activities going on within the different spaces
• the materials used in its construction
• how it is heated, cooled and ventilated
• how lighting is provided

The ratings are presented in a similar way to those found on white goods - such as fridges and washing machines. They are standardised, so the energy efficiency of one building can easily be compared with another building of a similar type. 'A' is the most efficient rating and 'G' the least efficient.

EPCs show the energy performance of the building as a carbon dioxide based index. They also provide:

• the EPC number and date of issue - the energy assessor will obtain this number when they file the EPC in the online register
• details of the energy assessor responsible for the EPC, including their name, accreditation number, employer's name (or any trading name if self-employed) and accreditation scheme
• information on how to complain or check whether an EPC is genuine

You can view your energy report on the Landmark Information Group website

EPCs for business properties are valid for up to ten years but cannot be amended. If you want an EPC to show improvements you have made in a building's energy efficiency, you will have to commission a new one.

Recommendation reports

All EPCs come with a recommendation report, which lists recommendations by the assessor for the improvement of the energy performance of the building. These comprise measures likely to have a short payback period (up to three years), a medium payback period (three to seven years) and those likely to have a longer payback period.

For each measure, there is also an indication of the relative impact it would make on the total carbon dioxide emissions of the building - high, medium or low.

Who produces Energy Performance Certificates

Energy Performance Certificates (EPCs) can only be produced by energy assessors who are members of a government-approved accredited scheme for that type of building, and who have the appropriate qualifications or experience. You can find an energy assessor or retrieve your energy report on the Landmark Information Group website - Opens in a new window.

Energy assessors:

• may be employed by a company - such as an estate agency or energy company - or be independent traders
• must produce an EPC using the correct government-approved software for the type of building
• have a duty of care and hold responsibility for the EPC throughout the ten years it is valid
• can appoint an individual or a team to help them gather information as long as the team members work under their direction
• are expected to visit business properties in person to make sure the information others have gathered is accurate

Energy assessors are also responsible for:

• ensuring that their assistants have the technical ability to carry out the work, are 'fit and proper' and have the proper insurance in place
• all actions, data and output of EPCs and recommendation reports as if they themselves had collected the data
• acting in an independent manner
• conducting energy assessments, producing EPCs and lodging them with their accreditation scheme

There are three levels of business building types and the energy assessor must be trained, qualified and accredited for the particular type of building and the associated government-approved software:

• level three covers simple, existing properties including small buildings or houses that have been converted to business use, eg doctors' surgeries, and uses software based on the Simplified Building Energy Model (SBEM)
• level four covers other new and existing properties, eg purpose-built office blocks, and uses software based on SBEM
• level five covers new and existing properties incorporating complex or innovative energy efficiency feature for which SBEM is not suitable, eg large office buildings and complex factories, and uses Dynamic Simulation Model tools

Enforcement of Energy Performance Certificates

Energy Performance Certificate (EPC) requirements are enforced by local authorities - usually trading standards officers. They can ask for a copy of an EPC from the owner or landlord of business premises at any time up to six months after the date on which they should have provided one. If this happens, you must give them a copy of the EPC within seven days of the request.

If you want to avoid a fixed penalty notice or a delay when you want to sell or let a building - or hand it over to the owners who commissioned it - you should:

• allow sufficient lead time to commission an energy assessor and make sure you have all necessary design and construction plans and information to hand so that the EPC does not delay your sale or rental agreement or defer handover time to the building's owner
• bear in mind that EPCs will increase your costs - the price of an EPC varies from around £5,000 for a 'simple' office building to around £40,000 for a large shopping centre
• factor in the cost of the EPC when setting the sale price of new or existing premises or negotiating a refurbishment contract as it is unlikely that you will be able to ask a prospective buyer or tenant to directly pay for an EPC or be able to recover the cost from an existing tenant

If you do not make an EPC available to a prospective buyer or tenant when selling or letting non-dwellings, the penalty is fixed, in most cases, at 12.5 per cent of the rateable value of the building. If this formula cannot be applied, the default penalty is £750. A formula is used as the costs of producing an EPC for business premises varies according to the size, complexity and use of the building. The range of penalties under this formula is set with a minimum of £500 and a maximum of £5,000.

You can request a review if you are issued with a penalty charge notice that you believe to be unjustified. If you find the outcome of the review unsatisfactory, you may appeal to the County Court within 28 days of receiving a notice confirming the penalty charge notice from the local authority. You will have a defence against a penalty charge notice if you can show that you requested an EPC from an appropriate person at least 14 days before it was required and it was not made available in time despite all reasonable effort to achieve this outcome.

It is a criminal offence to:

• disclose an EPC, a recommendation report or any information gathered while preparing these in any circumstances other than to fulfil their duties under the law relating to EPCs - ie to prospective buyers or tenants for the purpose of making a decision regarding the property, or to accreditation schemes and/or enforcement bodies if required to do so
• obstruct or impersonate an enforcement officer

A conviction for one of these offences could lead to a £5,000 fine.

Energy Performance Certificates for rented business premises

A landlord is responsible for making sure that there is an Energy Performance Certificate (EPC) for the building or part of a building designed or altered to be used separately.

An EPC must be provided as early as possible to prospective tenants, ie when viewings are conducted and written information provided, but definitely before the contract is signed. This applies even if an agent or other service organisation represents them or actually provides the EPC to the prospective tenants. Landlords should therefore make sure that their agents are meeting their duties.

The number and type of EPCs will depend on various criteria, such as whether you are letting an office block floor by floor, a number of floors, or only part of a floor.

Other criteria to consider are whether:

• office blocks and mixed use buildings have a common heating system or two or more heating systems
• shops with dwellings above have separate access and no common parts
• shops with residential space above have shared common access

For example, you:

• can have an EPC for the whole building if that building has a common heating system - this EPC may subsequently be used for any part of the building offered separately for let
• should prepare an EPC for each part of a building that is being offered separately for let, where the heating systems are separate - these individual EPCs should reflect the services in the parts being offered for let including a portion of the energy consumption of any common areas that exist solely or mainly for access to the part being let
• can prepare an EPC for a whole building if you are letting it as a whole, even if it has parts designed or altered to be used separately with separate heating systems - this EPC could not then be used if a separate part of the building was subsequently offered for let

Energy Performance Certificates for newly built business premises

When a building is physically complete, the builder must:

• Arrange for an accredited energy assessor to carry out an energy performance assessment when the building is complete and produce both an Energy Performance Certificate (EPC) and a recommendation report for it.
• Give the EPC to the building's new owner within five days of completion.
• Notify building control officers or approved inspectors at the local authority that they have done so. Building control will not issue a final completion certificate for new buildings or refurbishment projects requiring building regulation consent until they are satisfied that the EPC has been properly produced and presented to the relevant party.

Building regulations include standards for the energy performance of new buildings which builders must adhere to in order to be compliant. You can find information on building regulations relating to energy efficiency on the Planning Portal website - Opens in a new window.

The same EPC responsibilities also apply when a builder completes a renovation or refurbishment that converts a building into more or fewer units than previously and, as part of that work, provides or extends any fixed services for heating, hot water, air conditioning or mechanical ventilation services provided in the building.

However, modifications to electric lighting do not trigger the need for an EPC.

Energy Performance Certificates for the sale of business premises

If you are selling business premises, you must supply one or more free Energy Performance Certificates (EPCs) - with their relevant recommendation reports - to prospective buyers.

You should provide the EPC either as soon as either:

• you provide a potential buyer with other detailed written information
• a potential buyer attends a viewing
• an offer is made to buy the property

If you do not provide an EPC any earlier, you must provide one to the buyer before completing a contract for sale of the building.

The number of EPCs required will depend on:

• the complexity of the building itself
• whether all or part of the building is being offered for sale
• whether office blocks and mixed use buildings have a common heating system
• whether all or some parts of office blocks and mixed use buildings have separate heating systems
• whether shops with dwellings above have separate access and no common parts
• whether shops with residential space above have shared common access

If you are selling a building and believe that the buyer intends to demolish and redevelop the site, you don't need to provide an EPC. This can usually be shown by having the relevant planning permission or evidence that planning permission has been applied for.

Please contact Surfkraft for further information

also, business advice websites such as this one are an excellent source of advice and information