F & G rated
This is a ‘hobby horse’ of mine, as an energy assessor I am regularly the subject of my colleagues jibes about EPC’s and how they are pointless and just get in the way of doing deals. My response has always been ‘wait, they will become relevant. So get them sorted now’
The changes requiring agents to have an EPC before marketing a commercial property have made them consider them more in the past few months – and strangely has made me busier! However there is another bit of legislation due to take effect from April 2018 which will potentially have a far greater impact and is only just being taken note of by the property world;
• The Energy Act 2011 was given Royal Assent on 18 October last year
• From 18 April 2018, it will be unlawful to let any property that fails to meet a minimum energy rating
What is not clear is exactly what the minimum rating will be, it is being speculated that the minimum will be an ‘E’. This would make all ‘F’ and ‘G’ rated properties unlettable!
As a practice we have been advising our clients to be aware of this for a while, but I have recently experienced its effect for the first time from one of the main lenders – a bank taking a charge over a development of six modern units that were built prior to the requirements for EPC’s on new builds. They had no legal responsibility for getting EPC’s on the units – but it was made a condition of the loan that they were provided.
What should you do / how might it affect you?
- This could have very significant implications for landlords, and for occupiers who wish to assign or sublet space.
- Marketability of some properties would become impossible unless they were upgraded to meet the minimum standards. It is estimated that approximately 20% of non-domestic properties could be in the F & G rating brackets.
- Further clarification on the transactional trigger for minimum energy standards is awaited; however the new minimum standards could apply to all lettings and re-lettings, including sub-lettings & assignments.
- Valuations of such properties could be affected if their marketability is diminished.
- Rent reviews for properties in this situation could also be affected.
- Implications for dilapidations assessments would also exist.
Food for thought, perhaps it is time to get your properties assessed so that you can be sure that they have a long term marketability?