Energy Act

The Energy Act 2011 contains a number of provisions which will affect the property industry. Probably most significant are the proposed EPC minimum standards requirements.

From April 2018, the proposed legislative changes would make it unlawful to let residential or commercial properties with an EPC Rating of F or G (i.e. the lowest 2 grades of energy efficiency). This could have very significant implications for landlords – and for occupiers who wish to assign or sublet space – including:

  • Marketability of some properties would become impossible unless they are upgraded in energy efficiency terms. It is estimated that about 20% of nondomestic properties could be in the F & G ratings bracket. It is important to note that some prime properties will be in this situation – it is not just about secondary or tertiary stock.
  • This situation could apply to all lettings and re-lettings, including sub-lettings & assignments.
  • Valuations of such properties would be obviously affected if their marketability is diminished.
  • Rent reviews for properties in this situation would also be affected.
  • Implications for dilapidations assessments would exist.

To address the implications of the proposed changes, landlords and occupiers will need to assess the status of their properties’ energy efficiency. Thereafter, they will need to consider undertaking retrofits or refurbishments and possibly bringing forward properties for marketing prior to 2018 or re-gearing leases. Some landlords and occupiers.