Since April 2018, commercial premises in England and Wales have needed an EPC rating of at least E before being let on a new lease. From 1 April 2023 the rule went further: under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, a landlord could not continue to let premises rated F or G, even where the lease was already running, unless a valid exemption was registered.
What landlords needed to do
- Check the EPC. Know the current rating for every let unit, and when each certificate expires.
- Find out what lifts the rating. Lighting, heating controls, insulation and plant replacement are common measures, and some cost far less than others.
- Check the lease. Whether the landlord can enter to carry out improvements, and whether the cost can be recovered, depends on the lease terms.
- Consider exemptions. Exemptions exist, for example where improvements would not pay for themselves or third party consent is refused, but they must be evidenced and registered.
The link with dilapidations
Energy standards are now part of many lease end discussions. A tenant who has removed or altered plant, or a landlord who needs to upgrade before reletting, will find energy performance coming up in the dilapidations negotiation. The RICS guidance note Dilapidations in England and Wales asks surveyors to consider what the landlord will actually do with the premises, which increasingly includes energy works.
Plan ahead
Energy improvements are cheapest when they are planned alongside other repairs. See our building surveys and dilapidations services.