Commercial Landlords fined over Energy Efficiency

The draft Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, come into effect on 1 April 2015 and should be understood by every Commercial and Business Landlord.

The draft Regulations prohibit the letting of a non-domestic property (i.e. subject to limited exceptions, a property situated in England and Wales that is not a dwelling and is let under a tenancy) with an Energy Performance Certificate (“EPC”) rating of below “E” (the minimum level of energy efficiency).

Once in force, the Regulations will apply to new tenancies granted on or after 1 April 2018 and will extend to existing tenancies on or after 1 April 2023. However, the Regulations will not apply to leases of less than six months (unless extended) or leases granted for a term of 99 years or more.

If an EPC issued in respect of a property is 10 years old or less the Regulations will apply. If an EPC is more than ten years’ old, it will not be valid for the purpose of the Regulations and the property will be outside the reach of the Regulations.

Landlords should be aware that the acquisition by a tenant of a new EPC (e.g. so as to facilitate assignment or subletting) will cause the Regulations to apply in relation to the property.

Enforcement of the Regulations is to fall to local authorities, who are to be empowered to issue compliance and penalty notices and impose fines of between £5,000 to £10,000 and 10% to 20% of the rateable value of the property.

Fitzhugh Gates Solicitors Comment

As 1 April 2018 approaches Commercial Landlords will be increasingly concerned to ensure that their properties are and remain as energy efficient as possible so as to avoid falling foul of the Regulations. They are likely to keep a watchful eye on tenant applications for alterations to let premises, to the extent that such proposed alterations may have a detrimental effect on the energy efficiency of the property.