The law will soon be changing to force commercial landlords to make their commercial properties as energy efficient as possible. The changes affecting commercial landlords are as follows:
From 1st April 2018
It will be unlawful for landlords to grant new leases of properties with energy efficiency ratings of “F” or “G”. This will also apply to landlords granting lease renewals and extensions of leases to existing tenants. The acceptable energy ratings necessary for the grant of a new lease will be between an “A” and “E”. Energy rating “E” being the minimum standard.
From 1st April 2023
The prohibition on leasing properties not meeting the minimum “E” standard will apply to all leases, whether they were granted before or after 1st April 2018. As such landlords will be in breach of the law even if they simply continue to let out properties with ratings of “F” or “G” where the lease was granted before 1st April 2018.
Landlords Non-Compliance
The financial penalties for non-compliance with the new law can be substantial. The maximum financial penalty that can be levied against a landlord is £150,000 per property.
Exemptions
There are some very important cost saving exemptions that may be applicable to landlords.
Practical Concerns
Government estimates indicate that 18% of privately rented commercial buildings fail to meet the minimum “E” energy standard. Therefore, a significant amount of the commercial property stock in England and Wales is going to be affected. The possible cost involved in improving a property’s energy efficiency could be substantial. Whilst the new law does not come into force until 1st April 2018, landlords should consider conducting energy assessments sooner rather than later and budget and plan for improvement works in advance. Leases should also be reviewed to check if landlords actually have the right to carry out any energy improvement works. If relations with tenants are hostile and or tenants refuse you access to carry out any required energy improvement works landlords should consider instructing solicitors to negotiate their access so as to avoid being in breach of the new law. Landlords should also ensure all new leases reserve a right for landlords to carry out energy improvement works. Tighter controls should also be placed on tenants restricting their ability to reduce energy efficiency ratings through making alterations to properties.
How we can help
Should you need expert legal advice regarding any of the above or other property or commercial law matters please contact us at Bromleys Solicitors on 0161 330 6821 or email Joseph Seyed Hossein on jhossein@bromleys.co.uk or Paul Westwell on pwestwell@bromleys.co.uk.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.