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Is your commercial property green enough to meet new laws?

If your property has a low energy efficiency rating, it is probably time to start looking at ways of improving it to make sure you are ready for proposed legal changes due to come into force in just over two-years-time.

It might sound ages away but from April 2018, it's highly likely that commercial property landlords will be required by law to upgrade the energy efficiency of their properties, to at least band 'E', before they will be legally allowed to grant any new leases. From 2023, the regulations will also apply to existing tenants in occupation of any commercial properties.

It is estimated that more than 680,000 properties in England and Wales - with an Energy Performance Certificate (EPC) of 'F' or 'G', the lowest and therefore least efficient of all the seven levels of energy band - are likely to be affected by this change.

What would the proposed changes mean in practise for commercial property landlords?

  • If you are looking to grant a new lease, you would need to comply with the proposed regulations by April 2018 or face a possible fine, although the exact level of these fines has not yet been set. Similarly, if you have a tenant in occupation you would need to comply with the regulations by April 2023;
  • You could also be required to carry out the necessary work to improve the properties to at least an 'E' band energy efficiency rating;
  • There may well be exemptions, for instance where a property does not require an EPC, although the Government has still to provide clarification and some of those exemptions may be complex and require professional advice to implement.

So, what do you need to do?

It is important to start looking ahead if your property has an EPC rating of F or G to assess any work that would need to be done to the property. The potential legal changes mean you could face restrictions on your ability to lease your properties from April 2018 if you don't make the necessary improvements.

Planning to buy or lease a commercial property?

These proposed changes will not just affect landlords.

If you are looking at buying or leasing a commercial property it is equally important to pay close attention to the EPC rating of the building in question.

If you are buying, and the building is rated F or G, you will need to factor in the possible cost of any works that may be needed to bring it up to at least an E rating.

And if you are taking out a lease, when the landlord will be responsible for any improvements, you need to ensure you discuss this prior to signing any paperwork.

For more information contact Heather Jones

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