Commercial landlords can breathe a collective sigh of relief, as the much-debated Energy Efficiency (Private Rented Property – England and Wales) Regulations have been passed: with just weeks to spare before parliament is dissolved for the general election. The new law, which will come into force on 1st April 2018, will require that all properties let by commercial landlords be upgraded to at least Energy Performance Certificate (EPC) band E standard before a new, or renewed, lease is signed.
Changing the law
The arrival of the legislation represents the end of a nervous period for many commercial landlords, who feared further changes to the rules if they were not passed before a general election – when there's a real risk of new government priorities sparking a change in attitude toward the law.
That said, there are still plenty of clauses and conditions for commercial landlords to get to grips with. Landlords who let a non-compliant property out for three months or longer may be fined £10,000, or 20% of the property's rentable value up to £150,000.
If you're worried about being unable to implement the necessary upgrade works, however, there are some exemptions to be aware of. Broadly exempt are works that aren't "permissible, appropriate and cost effective". More specifically, they are:
- When upgrades don't meet the Green Deal's "golden rule" – ie cost more than the money saved on fuel bills, or require a loan longer than seven years and aren't covered by the Green Deal.
- When a tenant refuses to give their consent for the works to be completed.
- If the necessary improvement works would reduce the property value by 5% of more.
If you think you might be exempt, you'll need to notify the DECC in order to be listed on a central register of exempt properties. You'll also be required to review the situation every five years.
The full Energy Efficiency (Private Rented Property – England and Wales) Regulations 2015 law is available online at the government legislation portal, and more details on EPCs for business premises can be found on gov.uk and The Energy Saving Trust website.
If you're still worried about the cost of improvement works, contact a us to speak to a Debbt Advisor for free advice on how to recoup rent arrears and stabilise your finances.