Poor rating for EPC regulations

Posted: 18/02/2013

With Jessops going into administration on 9 January 2013, many will be forgiven for missing the Energy Performance of Buildings (England and Wales) Regulations 2012 (the Regulations), which came into force on the same day. They make important changes to the energy performance certificate (EPC) and display energy certificate (DEC) regimes, and were quietly laid before Parliament while Christmas festivities were in full swing. The Department for Communities and Local Government (DCLG) has also issued revised guidance: Recast of the Energy Performance of Buildings Directive (the guidance). This article covers what property owners, occupiers and their advisers need to know to get up to speed.

New obligation to display EPCs

Where a building is larger than 500m², not a dwelling and frequently visited by the public, regulation 10 imposes a new obligation to display an EPC where one is available. The EPC (not just the asset rating or graph) must be displayed in a prominent place, clearly visible to members of the public.

It appears that EPCs existing before 9 January 2013 and those commissioned voluntarily need not be displayed. The guidance (but not the Regulations) says the 'building occupier' has the duty to display. For a single-let building, the occupier will be the tenant; for multi-let buildings, both landlords and tenants could be liable.

If there is no current EPC, one does not need to be commissioned specifically for display. However, where an EPC subsequently becomes available, the building occupier must display it (even if the EPC is made available to someone else). Tenants may now (in the lease) require their landlord to give them a copy of any EPC the landlord obtains. Tenants may also have to monitor the EPC Register.

The phrase 'frequently visited by the public' is undefined. The guidance indicates that members of the public must visit on a daily or near daily basis and have an express or implied licence to enter. This will include shops and restaurants but questions remain over less clear-cut examples. Arguably, high street offices that can be visited by the public without an appointment will be caught. However, there is uncertainty over buildings where visitors require an appointment or a security pass. Do they cease to be members of the public?

Regulation 10 may be ignored in practice as the Regulations neither say who can enforce it, nor prescribe penalties for breach.

Advertisements in commercial media

For buildings offered for sale or rent after 9 January 2013, it is no longer necessary to attach a copy of the EPC's first page to any written particulars. Instead, advertisements in commercial media for the sale or rent of buildings (both commercial and residential) must give the asset rating from a valid EPC.

The term 'asset rating' is defined as a 'numerical indicator' (not the EPC graph or A-G rating) and here the guidance is inconsistent. Until there is clarity, it is advisable to include the EPC graph (where there is sufficient space) or the numerical number along with the more recognised A-G rating.

'Commercial media' is undefined but is likely to include the internet, newspapers, magazines and sales particulars. If there is no valid EPC available at the time of advertising, the building can be advertised without the asset rating. Once a valid EPC becomes available, subsequent advertisements must include the asset rating. Parties advertising a building for sale or rent are advised to search the EPC Register to check what EPCs have been issued in relation to it - the person advertising the building may have an invalid EPC if a newer one has been made available to another party.

It is not specified who must comply with Regulation 11 and currently there is no penalty for breach.

Extended EPC exemptions

More types of building are now exempt from the EPC obligations in Part 2 of the Regulations. Existing exemptions have also been slightly rewritten and it is advisable to check the wording of any exemption before relying on it.

The new exemptions are:

• Protected/listed buildings but only 'in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance'. It is unclear, how far the exemption extends. Are buildings in a conservation area exempt? What are 'minimum energy performance requirements'?
• Non-residential agricultural buildings 'in use by a sector covered by a national sectoral agreement on energy performance'. No guidance is given on this exemption;
• Residential buildings used for short periods (eg holiday lets).  

Changes to DECs

Institutions 'providing public services to a large number of persons' no longer need to display a DEC, but may need to display an EPC instead. Only buildings of the relevant size that are occupied by a public authority need a DEC.

The size threshold has reduced to buildings with a total useful floor area over 500m². From 9 July 2015 this drops again to a floor area of between 250m² and less than 500m². Probably unintentionally, buildings of exactly 500m² are not covered at all.

DECs for buildings over 1,000m² last 12 months (as previously the case) but for smaller buildings, the DEC lasts 10 years.

Finally, the contents of the DEC have changed slightly - an asset rating will not be given. Also, advisory reports are replaced with recommendation reports, the validity of which may be either seven or 10 years depending on when the 'nominated date' (defined in the Regulation) falls.

Changes needed

Far from simplifying the EPC and DEC regimes, the new regulations and guidance throw up many unanswered questions. It is hoped that DCLG issues amended guidance and regulations shortly. This is one Christmas gift that definitely needs returning.

This article was published in Estates Gazette in February 2013.

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