commercial epc’s

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Energy Performance Certificates for Commercial Property in Brighton, Eastbourne, Worthing and East and West Sussex.

Craig Ritchie BSc MRICS of RitchieLambor, the largest  supplier of commercial EPC’s in Brighton, Eastbourne, Worthing, and Sussex provides an update of this new legislation which will become law on 1 October 2008

In just over 2 months, on 1 October 2008, it will become a legal requirement to provide a Commercial Energy Performance Certificate (EPC) with the sales particulars for any commercial property that is being marketed for sale or to let in Brighton, Eastbourne, Worthing and the rest of Sussex including property on the market at present but not let or sold before 1 October 2008.

The Commercial EPC looks similar to the ‘fridge’ style EPC that is used in house sales and will rate the energy efficiency of the building by applying zoning methods to calculate the energy efficiency of the building and estimating how much carbon dioxide escapes into the atmosphere. It will give each property (or part of a property) a rating from A-G.

Unlike the EPC software used for residential property, the Commercial EPC software makes many fewer assumptions, so the Commercial Energy Assessor has to collect much more data and comment on the fabric of the building and the services in much more detail. The Commercial Energy Assessor has to be more qualified and skilled and the whole energy assessment process takes significantly longer.  The result being that the Commercial EPC is significantly more expensive than its residential counterpart. Fees will vary from £450 to £3,000 per building, depending on the size, complexity and heating and cooling facilities of the building.

The agent marketing the property must provide an EPC with the sales particulars and free of charge, to all prospective purchasers or tenants. Failure to do so would make the agent/landlord liable to a fine from the local trading standards officer of between £500 and £5,000 based on rateable value of the property concerned.

The Commercial EPC can only be carried out by a qualified Commercial Energy Assessor.

RitchieLambor provide comprehensive, professional Commercial EPC Certificates in Brighton, Worthing, Eastbourne, Lewes, Haywards Heath, Hastings, Littlehampton, Arundel and all  throughout East Sussex and West Sussex on all types of commercial buildings. The reports also contain recommendations as to how to improve the energy efficiency of the property and achieve a higher grading. This should improve saleability by making the building cheaper to run and with a lower carbon footprint.

We have the largest team in East Sussex and West Sussex offer a competitive and fast service to our clients. Call Craig Ritchie or Maggie Harris on 01273 710707.

Commercial EPC’s:  What are they?

A Commercial EPC is effectively a 5 page document that;

a)   Expresses the energy rating of the building  (A [highest]  -  G [lowest] and a numerical value).

b)   Contains the total useful floor area, address of property, name and address of the Energy Assessor and the date it was issued with a registered reference number.

c)  Is accompanied by a recommendation report with suggestions of how the energy rating could be improved in the short, medium and long term.

 

When do EPC’s  become Law?

For buildings over 2,500 sq m (27, 000 sq ft) it is already a legal requirement since 1 July 2008.
For all commercial properties the regulations will apply from 1st October 2008.

So when do they need to be provided?

The commercial EPC must be provided by ‘the relevant person’ at the earliest opportunity and in any event before entering into any contract to sell or rent a building.

The regulations state that an EPC for all commercial property that is to let or for sale should be provided with the sales particulars or upon the first viewing whichever is the earlier.

Who is responsible for obtaining an EPC?

The regulations refer to a ‘relevant person’ as the person who is responsible for obtaining an EPC. The relevant person is referred to as either ‘the seller’ when a building is being sold or ‘the prospective landlord’ when a building is being rented out.

The regulations apply where the written particulars are given by the relevant person or another person on his behalf. The person giving the sales particulars must ensure that they include an asset rating of the building or attach an EPC to the sales particulars. The sales particulars are described as any document containing two of the following; a photograph of any room in the building, a floor plan, a description of the size of the rooms. This includes electronically provided information.

On an assignment, although not stated categorically in the regulations the perception is that the assignor or tenant selling his lease, is deemed the seller and is, therefore, the ‘relevant person’.

What if they don’t?

If the relevant person or his/her agent does not provide a commercial EPC upon inspection or with sales particulars then he/she is liable to a fine from the local weights and measures authority (trading standards officer). The officer can  ‘require a person who appears to him to be subject to any duties under the regulations to produce a copy of a valid EPC at any time up until 6 months after the marketing took place’.

The fine is based on a number of criteria but is mainly calculated on 12.5% of rateable value between a minimum of £500 and a maximum of £5,000.

The regulations state that the officer can give a penalty charge notice to any person who has committed a breach of any duty under the various parts of the regulations, in particular, ‘the person giving the particulars’  and ‘the relevant person’.

How long is it valid for?

The EPC is valid for 10 years unless major modifications have been carried out to the property in that time period.

Who can provide an EPC and what do they do?

An EPC can only be carried out by a qualified Energy Assessor.

An energy assessor has to attend specific training, pass exams and carry out several monitored energy reports before he/she is accepted on a government approved accreditation scheme. This normally takes about 6 months in total.  In our office all of our energy assessors have trained with the Building Research Establishment (BRE).

The basic standard is a level 3 assessor who is qualified to provide EPC’s for an estimated 75% of commercial properties in England and Wales. They cannot assess properties with a more complex heating or cooling system, typically air conditioning.

A level 4 assessor can carry out EPC’s on the vast majority of commercial properties. The  exceptions are highly complex building such as shopping centres with say an atrium etc. These can only be carried out by a level 5 assessor.

The commercial energy assessor works with a standard software system that is referred to as SBEM. This is a much more complex system than the one used for generating EPCs for existing residential properties, which is a reduced data SAP system.

The energy assessor will record and assess the thermal efficiency of the fabric of the building the walls, roof, floors, windows, etc; and all the services including heating, lighting, cooling, ventilation, type of switches, etc. The building is zoned in some detail based on activity and energy usage of that zone.  This data is then entered into the software and the final assessment is made.  A number of recommendations will be generated to which the assessor may add some of their own.

The main cost of the commercial EPC reflects the level of skill and knowledge of the commercial energy assessor (who needs significant property knowledge before commencing the course) and the time it takes to record all the relevant data and input it into the software to obtain the EPC. This will rarely take less than a day.

How can you help us?

Some things can speed up the preparation of the EPC and may help reduce the cost or the time it takes to prepare.  This includes the provision of any CAD drawings of the property, if available. Any detailed information of the services used, boiler type, cooling system etc. is also helpful.

How might we help you?

It may be that you decide to carry out some of the recommendations we make that could improve your EPC rating and thus make your property more saleable/lettable. Some of the recommendations may be cost prohibitive, others not. By working with our Commercial Energy Assessors it may be possible to improve, in the short term, or demonstrate to potential tenants/occupiers how in the medium term the EPC rating could be improved. This would reduce the energy costs of the building and reduce the carbon footprint and therefore make it a more attractive building, which should improve the saleability/lettability.

For example, of the Commercial EPC’s completed in 2008 so far the following have been the most common recommendations made; use more energy efficient lighting, use more solar control measures (reflective coating/shading devices), introduce electronic controls to improve efficiency of fluorescent lighting, consider solar water heating, review boiler. 

So are any buildings exempt?

Only a few.

The following are exempt: places of worship, buildings that are intended to exist for less than two years, agricultural buildings and some basic workshops with low energy demands.

Also detached buildings of less than 50 sq m (550 sq ft) are exempt.

Finally where it can be demonstrated that a building is suitable for demolition or redevelopment it could be exempt. In this instance the property should have appropriate planning consents etc or the seller has reasonable grounds to believe that a prospective buyer intends to demolish the building.

A commercial EPC will not be required for a lease renewal or a lease extension or  surrender or under a compulsory purchase order. ‘i.e. transactions that do not involve a new owner or tenant may not require an EPC’.

What about part-let space and Investment Sales?

Properties that are to be sold as an investment with tenants remaining in occupation will require a commercial EPC.

The situation with regard to part-let space for example a suite in an office block is complex. The general rule is ‘The EPC must reflect the accommodation on offer.’

We recommend you ask us to advise on specific instances.

However it may be appropriate in the case of a multi-let office to obtain one EPC for the entire building and then use that for all the suites.

Can the cost of an EPC be re-claimed on the service charge?

This may be possible but is debatable and will as usual depend on the terms of the lease. New leases should deal with this new legislation.

What about shops with residential above?

If the flat/maisonette is self-contained then a separate domestic EPC is required for the flat (which we can also supply).  If it is not self-contained then it will be included in the commercial EPC for the shop.

What about guest houses?

A guesthouse will require a commercial EPC as it is regarded as a commercial property under the directive.

What Areas do RitchieLambor cover?

We cover all Bexhill, Brighton and Hove, Burgess Hill, Chichester, East Grinstead, Eastbourne, Gatwick, Hastings, Haywards Heath, Lancing, Newhaven, Peacehaven, Pulborough, Rye, Seaford, St Leonards on Sea and Worthing

Will the law definitely come in on 1 October 2008?

The legislation is already in place for large buildings and many commercial EPC’s have already been carried out. It would appear that the legislation will not be delayed or postponed. However, there is a genuine question about the number of qualified Energy Assessors although a large number are in training.

As the legislation stands it would be a breach of the law to market a building without a commercial EPC from 1 October 2008. This means that all existing properties on the books of commercial estate agents require an EPC before 1 October 2008 throughout England and Wales or they will have to be taken off the market.

We suspect that between now and October a temporary reprieve will be allowed stating that providing the agent has instructed an energy assessor then marketing can continue for a limited period. This is, of course, total speculation based on government action with Domestic EPC’s and commercial EPC’s to date.

Why are we having Commercial EPC’s anyway?

Greenhouse gases contribute to global temperatures through the greenhouse effect. Greenhouse gases are produced by many natural and industrial processes. Current levels of CO2 are approximately 25% higher than during pre-industrial times, when direct human influence was negligible. There is a general view that it may get a bit too hot on the planet to sustain human life!

The greenhouse gas caused by human activity is predominately carbon dioxide. It is estimated that 50% of all UK carbon emissions come from UK property. Commercial property (or non-domestic as the government refers to it) accounts for just under one fifth or 20%.

The UK Government has agreed with The European Union Energy Performance of Buildings Directive to promote the improvement of energy performance of buildings within the Community. Each EU member state is required to transpose the Directive into law by the beginning of 2006 with a further three years being allowed for full implementation of specific articles. This gives the UK until the beginning of 2009.

The UK Government has established its commitment to addressing climate change through legal instruments. These include the Kyoto Protocol, Energy White Paper, Building Regulations and Sustainable Development Strategy. The Energy Performance of Buildings Directive is another implemented in line with these commitments and is where EPC’s come in.

The specific laws and rules relating to Commercial EPC’s are set out in The Energy Performance of Buildings Regulations 2007. (Statutory Instrument 2007 No. 991).

 

Craig Ritchie 28 July 2008

This is not a legal opinion and just a  guide aimed to inform. Whilst due care and attention has been put into this report please do not base any commercial decision on the information contained herein without further appropriate verification of the legislation. Where an opinion has been given it is the personal opinion of Craig Ritchie only. Copyright Craig Ritchie 2008