The Government has launched a consultation on the Energy Performance of Buildings framework as part of its drive to achieve net zero emissions by 2050. This article focuses on the proposed changes to energy performance certificates (EPCs) for commercial properties.
It is important to note that this is not a consultation on potential changes to the Minimum Energy Efficiency Standards . The "MEES" rules lay down a minimum energy grade, currently E, for commercial and residential lettings. The minimum grade is likely to be increased in the future, but the previous Government put this on hold and the new administration is yet to announce its plans.
This consultation looks at the narrower questions of how EPCs are assessed and how often a new EPC should be required. Of course, any significant changes to the EPC rules will indirectly influence how the MEES rules affect the property market.
What are the key proposals?
EPC metrics
The Government favours keeping the carbon metric as the single headline metric used to calculate the energy performance of a commercial property in the short term, but asks whether multiple metrics should be introduced over time. These would include factors such as energy use, fabric performance, heating system and smart technology and in the future, even wellbeing, biodiversity and water efficiency.
If the metrics are changed, clients who have invested in achieving high EPC ratings would need to reassess their properties under the new metrics. While existing EPCs will remain valid, future EPCs may yield different results for the same buildings.
Validity period
Should the shelf life of an EPC be reduced from the current 10 years, to better reflect building upgrades and improve accuracy? Options being considered range from 2 years (or less) to 7 years. During any transitional period, the Government favours existing EPCs remaining valid until the end of their 10 year period.
Requirement for a valid EPC
The Government proposes requiring a valid EPC throughout the term of a lease, rather than only on a re-letting or sale. This would help ensure the EPC is more accurate and up-to-date. As a property only falls within the MEES prohibition if it is required to have an EPC, this would also bring more properties within the scope of MEES.
Listed buildings
The Government supports bringing all listed buildings within the EPC net. It argues that heritage buildings often have poor energy performance, and that some energy improvements can be carried out without adverse effect. Owners of listed buildings would need to comply with MEES if the property is let, but with requirements tailored so that owners are not forced to make unsuitable alterations.
Marketing
There is currently a 28 day grace period for an EPC to be produced after the owner has begun marketing it for sale or letting. It is proposed to do away with this grace period, so that an EPC must always be obtained before marketing commences.
EPC assessors
The Government suggests that the quality of EPC assessors should be improved, largely by overhauling training and introducing specific requirements for CPD for assessors.
Compliance and enforcement
The consultation acknowledges that little enforcement action is taken in practice. The Government proposes working with the Local Weights and Measures Authorities to improve enforcement, and encouraging estate and letting agents to promote the need for EPCs. The fines for breaches may also be increased.
Comment
The pace of reform has slowed in recent years, but this consultation suggests the new Government is committed to environmental sustainability and recognises the ongoing issue of energy inefficient buildings.
We will wait to see what changes are made to the minimum energy standards themselves, an area not covered by this consultation. Property owners need to be ready for the potential implications of the evolving EPC framework, regardless of whether the minimum E grade is increased soon.