EPC Changes - What Will Be the Impact on Charities that Rent Property?
Changes to energy performance certificates (EPCs) are due to come into effect and will affect charities that rent property.
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (the MEES Regulations) have set a minimum energy efficiency standard (MEES) which applies to residential and commercial property. These help to meet the UK's target of a 78% reduction in greenhouse gases by 2035 and a target to achieve Net Zero by 2050.
Buildings are given an energy efficiency rating between A and G where an A rating is deemed the most energy efficient building and a G rating is the least energy efficient building.
What Initial Changes Are Due to Come into Force?
From 1 April 2023, in order for a Landlord to let a building, it must have at least an E rating (save for some exemptions).
What Further Changes are Proposed for 2027-2030?
The Government have introduced changes to the EPC rules on an incremental scale over the next 7 years. From 1 April 2027, commercially rented property that falls under the MEES Regulations must achieve a minimum EPC rating of C. By 1 April 2030, this is a minimum of EPC rating of B and a failure to meet these standards can place the landlord at risk of a fine.
How Do These Changes Affect Charities that Are Tenants?
The changes will affect Tenants who have a lease which will extend past 2027 (and 2030). If the property has an EPC rating below C, landlords will almost certainly be looking to upgrade the energy efficiency of their buildings to meet the standard criteria. This could include:
- upgrading the boiler
- changes to mechanical and electrical building services
- changes to insulation
- upgrading glazing windows
- using of energy efficient lighting
This drive to improve energy performance of properties will benefit Tenants in the current climate of rising energy bills.
The ability for the Landlord to enter into property to carry out works will depend of the specific wording in the Lease.
Leases negotiated over the next seven years are likely to either permit the Landlord to carry out works to improve energy efficiency, or may, if Landlords are aware that the property is not up to the energy efficiency standards only be able to grant short terms leases and require the property back to carry out substantial upgrades.