Energy performance certificate requirements extended to include commercial property with effect from October 1 2008

Strategic Direction

ISSN: 0258-0543

Article publication date: 23 May 2008

Citation

Evans, J. (2008), "Energy performance certificate requirements extended to include commercial property with effect from October 1 2008", Strategic Direction, Vol. 24 No. 7. https://doi.org/10.1108/sd.2008.05624gab.002

Publisher

:

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited


Energy performance certificate requirements extended to include commercial property with effect from October 1 2008

Article Type: Corporate law outlook From: Strategic Direction, Volume 24, Issue 7.

Julie Evans, Noel Scanlon Bradford and Leeds-based law firm Gordons.

Energy performance certificates (EPC’s) are already an integral part of the home information packs (HIPS) for domestic property and must be made available when a property is sold. The requirement for EPC’s to be made available to prospective buyers and tenants whenever a building is being constructed or tenanted will be phased in over the next few months with a deadline of October 1, 2008 for dwellings and non-dwellings that have not been previously captured by the regulations. This will therefore start to effect commercial property and residential developments.

From that date an energy performance certificate must be prominently displayed in buildings with a total useful floor area over 1,000 square meters “occupied by public authorities and by institutions providing public services to a large number of persons and therefore frequently visited by those persons”.

The regulation requirement forms part of the Energy Performance Building Directive (2002/91/EC) which is the EU and UK government’s proposals to reduce the speed of climate change and meet their emission targets as stated under the Kyoto Protocol.

Properties have been targeted because the building sector is believed to account for approximately 40 percent of the total energy consumption of the EU and 50 percent of the UK’s total carbon dioxide emissions. The EU set a deadline for implementation of this directive into national law of 4 January 2006 that has obviously been missed. A timetable of implementation has been drawn up to rectify this.

The building directive has further implications than just requiring an energy performance certificate to be made available, for example:

  • New and large buildings with a floor area of more than 1,000 square meters undergoing major renovations must meet minimum energy performance requirements.

  • A feasibility study of alternative heating and energy supply systems must be carried out before the construction of a new large building.

  • There must be regular inspections of boilers and air-conditioning systems.

Certain requirements to reduce energy consumption under the building directive have been implemented into UK law through changes to the building regulations. This will obviously impact on the residential development sector as all newly constructed buildings will have to comply with the new building regulations.

Buildings are to be better insulated and make use of more efficient heating systems; new buildings must meet minimum energy performance standards so as not to exceed the target carbon dioxide emission rates set by the secretary of state.

Existing large buildings undergoing renovation must be upgraded to meet the new minimum energy performance standards but only insofar as “technically, functionally and economically feasible” which is perhaps a nod to the obvious difficulties and expense this will bring to the commercial property sector.

The estimated cost of carbon reductions in new commercial property ranges from an additional 5 to 30 percent to current baseline costs. To assist in financing endeavors to achieve the energy performance standards the UK government is considering offering the following financial incentives:

  • Dubbed “green mortgages” some lenders already offer a discounted interest rate for energy efficient homes or for loans to make energy efficiency improvements.

  • Linked energy company initiatives and green mortgages, giving homebuyers cash payments to make energy efficient savings around their home.

  • Certain local authorities have already piloted schemes with energy companies to give council tax rebates to people who make energy saving alterations to their home.

  • Landlord’s energy saving allowance.

  • Green landlord scheme.

  • Reduced VAT (5 percent instead of 17.5 percent).

  • Warm front scheme.

  • The decent homes program.

  • Exemption from stamp duty for a limited period.

By 2016 all new homes should be achieving zero-carbon emissions. The timescale for achieving zero-carbon emissions from commercial buildings is 2020. The UK government will probably have to continue to revise their ways of implementing the building directive in order to achieve this.

If you would like any further information regarding HIPS, EPCs or any aspect of commercial property Gordons LLP has a team of highly experienced lawyers ready to provide you with straightforward no nonsense solutions.

Elements of this article were sourced from www.practicallaw.com/main.jsp

Acknowledgements

Issued on behalf of Gordons LLP by Radiant. For further information please contact Rob Smith (tel: 0113 394 4610, mobile: 07840 677534, e-mail: rob.smith@radiantpr.co.uk) or Tracy Milnes (tel: 0113 394 4611, mobile: 07809 364975, e-mail: tracy.milnes@radiantpr.co.uk).