An insight into the minimum energy performance rating for commercial properties

In a world where climate change and preserving the environment are becoming increasingly important, energy efficiency is essential in reducing our carbon footprints. While we all have a responsibility in our domestic lives to do what we can, we also have a responsibility in our commercial settings.

One of the ways that the government is looking to help to reduce commercial carbon footprints is through the use of commercial EPCs (Energy Performance Certificates). These are generated having had an assessment carried out by a qualified surveyor, resulting in the property being given an Energy Rating of between band A and band G (with a band A property being the most energy efficient, and band G being the least).

A commercial property EPC rating is generated after looking at a number of different factors, including the construction of the property and the presence of any energy-saving measures. It’s a requirement whenever a commercial property is rented, sold, or built.

Failure to supply a valid commercial EPC to any prospective tenants or buyers can result in a fine of between £500 and £5,000 depending on the rateable value of the property. The landlord will also be prevented from continuing to let the property or grant a new lease if they do not comply.

EPC rating expectations for commercial properties by 2030

In an attempt to reach Net Zero Carbon targets by 2050, the government has set a minimum requirement for commercial EPC ratings to be a band E (as long as the building is not exempt). However, this rule is set to change in 2030, increasing to a minimum of band B.

There are some occasions when an exemption is applicable. A landlord is still able to rent out their commercial property if they have carried out all of the EPC surveyor’s recommended improvements even if they have not managed to reach a band E (band B in 2030).

Likewise, if any of the recommended energy efficiency improvements cannot be carried out for reasons out of the landlord’s control – for example, the building is listed – and the stipulated energy efficiency rating isn’t reached, the landlord will still be able to lease out the commercial property.

In addition, if the commercial property’s lease is for less than 6 months or more than 99 years, this rule also doesn’t apply.

When an EPC assessment is carried out, commercial properties are not only given an energy-efficiency banding, but a list of recommendations on how to improve the rating.

These recommendations may include a range of different measures, including:

• Installing new heating and boiler systems
• Fitting low-energy lighting
• Installing insulation measures such as wall, loft, or floor insulation
• Installing double glazing
• Fitting draught-proofing around windows and doors
• Installing renewable energy sources such as solar panels

Penalties to be aware of

Landlords must not rent out the property until the minimum EPC banding of a property is met, but the cost of the energy efficiency improvements can be substantial. However, if landlords don’t adhere to the regulations, there can be tough penalties.

For landlords that grant a new lease or continue to let a commercial property without an EPC (or an EPC of the minimum banding or higher), the fine is as follows:

• If the breach has occurred for less than 3 months, the maximum fine is £5,000 or 10% of the rateable value of the property
• If the breach occurs for more than 3 months, landlords could face a maximum fine of £10,000 or 20% of the rateable value of the property

Furthermore, these fines are set to rise to a maximum of £150,000 in 2023.