Since the 1st of April 2023, Landlords were prohibited from letting out a domestic or non-domestic property without a minimum energy rating of an ‘E’. This applies to existing lease as well as a new leases.
This rule is subject to the following exemptions:
Temporary buildings of 2 years or less, buildings that are not heated or cooled, buildings less than
50sqm, properties due to be demolished, owner-occupied buildings, all improvements possible have
been made, ‘7-year payback’ i.e. the works will not pay for themselves within 7 years, specific wall
insulation exemption (requiring expert evidence that it is not appropriate for the building), consent
reasonably withheld, works would devalue the property by more than 5%, a new landlord (temporary
exemption for 6 months).
Leasing out properties with an EPC rating below an ‘E’ is now prohibited which affects both new and
existing tenancies.
In 2021, the government introduced a two-stage approach in a bid to achieve a net-zero carbon by
2050.
Stage 1 – From the 1st April 2027, all non-domestic rented properties must have a minimum energy
rating of ‘C’.
Stage 2 – From the 1st April 2030, all non-domestic rented properties must have a minimum energy
rating of ‘B’.
Non-compliance of the rules could have resulted in landlords being published on a public register of
non-compliance as well as being subject to financial penalties.
The financial penalties were as follows:
- Less than 3 months’ non-compliance – Up to 10% of rateable value capped at £50,000
- 3 months or more of non-compliance – Up to 20% of rateable value capped at £150,000
This would have also impacted on marketability of the Property, the inability to let the Property out
and the capital expenditure to be spent on improvement works.
On the 20th September 2023, Prime Minister Rishi Sunak scrapped the above two-stage approach
referring to it as costly and unrealistic to expect property owners to improve the energy rating of
properties within 2 years.
Although, the two-stage approach was discarded by the government, their aim to achieve a net-zero
carbon by 2050 is still very much in effect and we urge all landlords of non-domestic properties to
review the energy rating of their properties and take measures to increase the same.
We would urge that you consider the EPC rating of a Property prior to purchasing or taking on a new
Lease as we anticipate that a revised policy will be issued by the Government in the near future.
The changes, when implemented, are going to have an impact on most parties having an interest in or
dealing with commercial properties.
Please get in touch with our Commercial Property Team if you would like further information about
energy ratings, by calling us on 0161 330 6821 or emailing bromleys@bromleys.co.uk.