What could be the cost of your EPC rating?

May 18, 2015

‘Minimum Energy Efficiency Standard’.

 

This new legislation reported to be in place by April 2018, will stop all lease events on assets that fall below ‘E’ on a Minimum EPC Rating. This poses a problem for building owners/managers, as roughly 18% of the England & Wales Property market sits directly below this level.

 

The respective fines that are issued for non-compliance is also changing, charging a percentage of 10-20% the value of the respective property (to a cap of £150,000).

 

There are no longer any exemptions from EPC obligations either after April 2008, the powers added to the legislation now covers all sections of the market. Any EPC readings deemed to be ‘outdated’ will be carried out again, in order to accurately represent the assets’ current state.

 

If you are an owner renting to tenants, conversation about lease agreement is likely to arise between you.

 

There are caveats to prevent unnecessary or insignificant improvements going forward:

 

1. Improvements must prove ‘cost effective’ and deliver a payback period within 7 years

 

2. Improvements must not negatively impact the value of an asset by more than 5%

 

3. Improvements must be agreed between all parties involved (landlords and tenants)

 

These factors will cause friction to this legislation taking full effect, but owners cannot afford to be caught on the wrong side of this movement. Just to be clear, the legislation will not directly stop a property being ‘sold’ if it falls below the minimum required reading, it primarily affects ‘leasing’ terms.

 

That being said however, expect that an asset with poor performance is likely to be seen as a significant risk, affecting willingness to buy.

 

If an asset of yours is under-performing, or you are not sure about how energy efficient it is. Be safe and request a free health check with TGLC today.

 

 

 

 

 

Sources:

image – imgkid.com – http://imgkid.com/seer-rating.shtml

Graeme Murray, Head of sustainable engineering – Buildings & Energy efficiency Magazine

 

 

Leave a Reply