In the majority of cases it will be the landlord’s responsibility, but retailers too need to be aware of their potential obligations or risk their reputations through failing to comply with environmental legislation.
DTZ director Charles Woollam says: “A lot of commercial property owners have got their heads round this now, but I’m not sure occupiers have.” Retailers that own their own property or that sub-let will be responsible for obtaining a certificate. It is also valuable for those retailers renting properties to know when they should ask for a certificate, what it should contain and how it could affect the value of properties.
When the new legislation comes into force, a certificate will be required almost as soon as a property is brought to market, meaning any delays will affect the overall speed of property transactions. There is also a shortage of qualified assessors, which could slow the process further.
Being aware of your obligations and rights and being fully prepared can help minimise the negative impact of the new legislation on your business.
What are EPCs?
Put simply, they will indicate whether a building is good, bad or different in terms of its carbon footprint. They will give a property an energy rating of A to G and include recommendations on how to reduce carbon emissions. Once issued, they are valid for 10 years.
The rules
New buildings: a certificate is required on physical completion of the project. The responsibility for obtaining a certificate lies with the constructor.
Existing buildings: they do not require a certificate until they are next put up for sale or rent. A free copy of the certificate must be available as soon as prospective buyers or tenants first ask for information or a viewing. In practice, certificates will need to be in place well before properties are brought to market. A lease renewed with the same tenant doesn’t require a certificate.
Deadlines
April 6 - all new constructions and existing buildings of more than 107,645 sq ft
July 1 – all commercial properties of more than 26,910 sq ft
October 1 – everything else measuring more than 540 sq ft
Penalties: fines will range between£500 and£5,000 depending on the value of the property. However, it is widely thought that the damage to a business’s reputation will be the more significant punishment.
Complications, confusion and concerns
Lack of accredited certifiers: as of yet, almost no one is qualified to issue EPCs. Training courses are just coming onto the market. A few assessors are expected to become accredited throughout March and more will come on board during the spring and summer.
In response to this concern, the Government have included a get-out that means those responsible don’t have to pay a fine if they have applied to get a certified at least 14 days before it was needed, but haven’t been able to get it accredited because of the lack of an available surveyor. However, they will have to have made their application. Not doing it out of ignorance will not be a valid excuse.
Required information unavailable: a large number of owners/occupiers are expected not to have all the information needed for the energy assessor to complete the certificate. For example, an energy assessor will need a floor plan and a lot of landlords won’t have the necessary plans to hand.
Multi-let buildings: the law is regarded to be slightly confusing in this area. Generally speaking, if a unit is self-contained it will require its own certificate, but if it shares services, for example a boiler, then one certificate for the whole centre will be enough.
However, in practice, there are numerous potential complications. For example, if you are in a unit and want to get out, you may rely on a landlord having one. Woollam warns: “It might hinder retailers’ ability to offload surplus property - a bit unwelcome in the present climate.” You may also be reliant on obtaining certain information from the landlord to complete the certificate - a time-consuming task at best.
Costs: obtaining a certificate for a small retail unit is expected to cost about£1,000. However, WSP Energy divisional managing director Chris Stubbs believes that costs are likely to rise. “At the moment, people are doing a certificate for what appears to be not much, but prices will go up, not down,” he says.
The Government estimated that obtaining a certificate will cost about£12,000 for a shopping centre but, in reality, quotes are now expected to be more in the region of£20,000 to£30,000.
The future
“The big question is what will it do to the value of property in the future,” says Stubbs. Many retailers now have publicly stated commitments to reducing their carbon emissions, so this information should be highly important to them and could prove pivotal to decision-making when looking for new space. Showing a preference might encourage property owners to do something about badly performing buildings.
Big-name retailers that need to be seen to be green are likely to turn their noses up at lower-rated properties. Stubbs says: “Can retailers like Marks & Spencer justify taking on a G when there is an E available [close by]? Landlords and property develops need to wait and see how severe the effect will be.”
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