More legislation to affect the licensed trade

Andrew Whelan Divisional Director, Fleurets Midlands

Energy Performance Certificates

After the change to the Licensing Laws and the Anti-Smoking Legislation, licensees were grateful that the Home Information Packs (HIPS) did not apply to most commercial property transactions.

However their relief was premature as one of the most important parts of a HIP, the Energy Performance Certificate (EPC), is being introduced to the commercial property market this year.

What is an EPC?

An EPC is a Certificate containing information about the energy performance of a building expressed on a scale of A - G, similar to the domestic appliance rating system. It will be introduced as a result of legislation passed last year "The Energy Performance of Buildings (Certificates and Inspections) (England & Wales) Regulations 2007".

EPCs were introduced because the Government and the EU are committed to reducing emissions from buildings which account for about 40% of the UKs CO2 emissions through the energy they waste.

When will it be implemented?

It will cover all commercial property transactions and will be implemented as follows: When a building is to be sold or let, the seller or landlord must provide any prospective buyer or tenant with a copy of a valid EPC and a recommendation report, free of charge, at the earliest opportunity.

Recommendation Report

When a seller or a landlord is required to produce an EPC, it must be accompanied by a recommendation report. This will contain suggestions for the improvement of the energy efficiency of the building and will be issued by the same assessor who issues the EPC.

It will contain two types of recommendation, one suggesting cost-effective alterations to the building and measures that would require a higher level of expenditure.

What will it cost?

The cost of an EPC will vary according to the type of building. For most pubs it may be in the low hundreds but for complex large hotels it may run into thousands of pounds. On a practical note, only accredited Energy Assessors can provide EPCs and in the short-term there may be problems obtaining a qualified assessor within the required timescale.

How long is it valid for?

10 years

Enforcement

Local Authorities will enforce this new legislation. The penalty for not producing a valid EPC will be 12.5% of the Rateable Value subject to a minimum penalty of £500 and a maximum of £5,000.

Likely impact on property transactions

The 2 most serious implications are the additional cost and the possible delay to a transaction.

For leasehold assignments there may be arguments as to who is going to pay for it, the Landlord or the Tenant, however most leases are drafted so that the tenant is likely to be responsible. Tenants should therefore confirm this with their landlord accordingly.

Our advice is that if you are considering selling or letting your property in the second half of the year, you should be speaking to assessors (and if you have a lease your landlord) as soon as possible to see what can be done now to avoid delays during the transaction period.