UK: Energy Performance Certificates

Last Updated: 8 July 2008
Article by Andrew Nicklinson

The government's Home Information Pack (HIPs) scheme was introduced at the end of 2007. A major part of the government's scheme is the introduction of Energy Performance Certificates (EPCs). The government sees EPCs as a vital part of its target reductions on CO2 emissions under the Kyoto protocol and other international agreements. According to government sources, buildings in the UK account for approximately 50% of the UK's energy consumption and carbon emissions, with commercial properties and public buildings accounting for nearly 25% of the UK's total carbon emissions.


Since 6 April 2008, EPCs have been required on the construction, sale or rental of commercial buildings with a floor space of over 10,000m2.

From 1 July to 1 October 2008 these provisions will be extended to buildings with a floor area of over 2,500m2.

From October EPCs will be compulsory on the sale or rental of all commercial buildings.


Existing tenancies in place before the deadline are exempt for the moment. However, once these properties are put up for sale or letting an EPC will be required.

There are a few exemptions from the regulations. They include:

  • Small non-residential buildings of less than 50m2 floor area

  • Buildings used primarily or solely as places of worship

  • Temporary buildings with a planned time of use of two years or less, industrial sites, workshops and non-residential agricultural buildings with low energy demand

Who is responsible for obtaining an EPC?

Where a building is being sold it is the seller who is responsible for obtaining a certificate. Where a building is to be rented out it is the prospective landlord's responsibility.

Commercial tenants will not be unaffected by the regulations however. Every person with an interest in, or in occupation of, a building is subject to a duty to allow such access as is reasonably necessary to allow energy assessors to inspect the building for the purpose of preparing an EPC or to inspect an air-conditioning system.

The effect of this provision is to provide commercial landlords with a right of access for the purpose of obtaining an EPC even where a lease does not contain sufficient entry rights. Commercial tenants are, therefore, likely to have to suffer the inconvenience and potential interruption to their business of an energy assessor on the premises.

How do they work

EPCs will assess the energy performance of buildings in much the same way as modern electrical appliances have been tested. Certificates grade the energy efficiency of a building on a scale of A-G. The calculation of the efficiency of a building is based on the asset rating of the structure of the building.

An EPC is valid for 10 years and is accompanied by a Recommendations Report, which contains suggestions as to how the energy efficiency of a building could be improved. The Recommendations Report includes a rating showing what could be achieved if all the recommendations were implemented. Importantly, the recommendations are not requirements. It is for a landlord or seller to choose to implement these recommendations or not.

EPCs must be available to prospective buyers or tenants before entering into a contract for sale or a lease and at no later than the time of issue of marketing materials.


Only an approved commercial energy assessor is able to issue commercial EPCs. The RICS has expressed concern over the number of assessors for the market and their ability to meet demand. With a shortage of supply many commercial property owners can expect inflated prices and delay in obtaining EPCs.

There is also huge uncertainty over the cost of complying with the regulations. Costs of policies vary according to the size and type of building, as well as the pricing policies of the providers. According to some sources estimates for complex commercial buildings vary from £1,800 to a staggering £10,000.

It is the property owner or landlord who will bear the cost of the complying with the regulations. However, it seems likely that commercial landlords will ultimately seek to recover the cost of assessments from tenants. It remains to be seen whether properties that achieve a high efficiency rating will attract higher rents or whether buyers will use a poor energy rating to negotiate a reduced level of rent.

Multi-let properties

Multi-let properties pose particular problems. The definition of "Building" within the regulations includes "a reference to a part of a building which has been used separately". This definition is sufficiently broad that where one tenant seeks to assign or sublet its interest in a multi-let property this might trigger the requirement for an EPC for the whole building. Tenants with no interest in the assignment will not welcome calls for them to contribute to the cost of obtaining an EPC. Careful consideration needs to be taken when drafting a lease to cover this eventuality adequately.

Glovers has already seen attempts by some commercial landlords to extend alienation rights to cover EPCs. Commercial tenants should ensure that they understand their position with regard to EPCs and the consequences this may have upon an assignment.

It remains to be seen how EPCs will affect multi-let properties in practice and who will ultimately bare the cost of a smaller carbon footprint.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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