1-Apr: Is your let commercial property EPC compliant?

Owners of commercial properties that do not have an Energy Performance Certificate (EPC) rating of ‘A’ to ‘E’ will need to carry out sufficient works to urgently improve the rating before 1 April 2023, unless specifically exempt. Whilst not directly tax or accountancy related, this change is affecting a lot of landlord clients.

The current legal requirement for commercial lettings is to have an EPC rating of at least an ‘E’ if a landlord intends to enter into a new lease (or renew one). However, with effect from 1 April 2023, this requirement is being extended to all existing leases with a term greater than 6 months and less than 99 years.

Commercial landlords have the obligation to comply with the regulations, unless specifically exempt. Further advice and details regarding exemptions should be sought from your legal adviser. It is our understanding that landlords could face a fine of up to 20% of the rateable value of a property (capped at £150,000) for failure to comply. Further restrictions are likely to be introduced in coming  years, which will further increase the expectations to a ‘C’ or even a ‘B’ rating.

What do I need to do now?

Commercial landlords should check current EPC ratings as soon as possible. Your EPC will contain (or there may be a separate report outlining) the recommendations to improve the energy rating of each property. The areas  considered may include expenditure on some of the following:

• Windows
• Roofs, walls and insulation
• Boilers and heating systems
• Renewable energy devices, such as solar panels
• Lighting

Expenditure on the above could attract tax relief, and your usual Whitings contact can give you guidance in this area.

I am a residential landlord rather than a commercial landlord; what does this mean for me?

The requirement for the EPC rating to be ‘E’ or higher has already been in place since 1 April 2020. We
understand that, under current proposals, all newly rented residential properties will be required to have an EPC rating of ‘C’ or above from 2025, and in 2028 this is expected to be extended to any existing tenancies.

Disclaimer - All information in this post was correct at time of writing.