Non-domestic rented buildings in England and Wales will need to meet strict energy efficiency standards of an EPC Band B by 2030

England-EPC-Grade-B-by-2030web

In line with its plans to reduce all UK greenhouse gas emissions to net-zero by 2050, the UK government is getting tougher on landlords of non-domestic rented buildings in England & Wales over EPC (Energy Performance Certificate) regulations. Landlords must ensure that all buildings in that category meet EPC Band B by 2030 regardless of when they were rented. Exactly how the new regulations will be implemented is still under consultation, and the government is accepting responses from all stakeholders, including landlords, tenants, local authorities and suppliers. This is likely to have big implications for commercial landlords and tenants.

Reducing energy used and emissions generated through use of commercial buildings 

The effect of these new regulations will be to reduce UK greenhouse gas emissions by 4.1 million tons of carbon dioxide between 2028 and 2032 and save businesses a billion pounds a year in energy bills. Energy savings will be around 10.3 TWh by 2030.

The built environment is responsible for 31% of total UK emissions, and improving energy efficiency is the most cost-effective way of reducing this. Minimum Energy Efficiency Standards (MEES) for Landlords of domestic and non-domestic properties came into force in April 2018. Since that date, private rented buildings have been required to comply with EPC E on new and renewed tenancies, and this will apply to all such properties from 1 April 2023.

Consultation to introduce EPC rating band B

In 2019 the government published a consultation on improving the energy performance of non-domestic private rented buildings to meet EPC B by 2030, which received considerable support. The government had considered setting EPC band C as the target but concluded that doing so would fail to deliver adequate carbon dioxide reductions. The consultation included views on how best to achieve the long term aims within the current environment. While most respondents supported the measures, it was generally thought that improvements were needed. The government has taken these criticisms on board in drafting revised proposals.

Alongside the consultation, the government also undertook a pilot study to investigate non-compliant buildings and the best ways of enforcing the regulations. Following this study's conclusion in March 2020, a second round of the pilot study has been launched. They anticipate that this will deliver a best-practice tool kit for local authorities on monitoring, compliance and enforcement.

The government has now launched a new consultation on the framework to deliver and roll out the plan. The consultation closes in June 2021, and the government will publish its response towards the end of the year. The new regulations will be set out, and the revised PRS regulations will come into force on 1 April 2025. The plan will include an interim milestone designed to discourage landlords from delaying taking action until 2029 or 2030. However, landlords could miss the interim milestone if meeting it would be disruptive or not cost-effective.

Additional reforms to EPC regulations  

 To ensure the success of the new framework, the government has concluded that additional reforms are necessary. These include:

  • A database on exemptions and compliance in the private rental sector to assist local authorities in compliance monitoring and enforcement.
  • A revised penalty framework.
  • Non-domestic rental properties will be required to have an EPC continually. 
  • Tenants will be required to share responsibility for compliance

Penalties and sanctions for non-compliance 

Landlords who fail to comply with these new regulations are likely to receive civil sanctions in terms of a publication penalty, in other words naming and shaming, along with financial penalties. For landlords who fail to register the property on the exemptions and compliance database or present a valid EPC or post improvement EPC, the maximum fine is likely to be £5,000. If a property is let in breach of PRS regulations, landlords will be liable for a maximum penalty of £150,000. Should the landlord fail to take action and repeat the breach, the continued breach will be treated as a "new case".

Over the last few years financial lenders have become more  aware of the importance of EPC ratings and we understand are beginning to introduce their own criteria when lending in some instances.

The introduction of these new regulations is likely to have an impact on both landlords and tenants and will require forward planning and upgrading to buildings. These regulations are for buildings located in England and Wales. Buildings in Scotland are regulated by different energy regulations. 

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