Commercially viable

Recent Carbon Trust research shows non-domestic buildings account for 18 percent of the UK’s overall carbon emissions. The Government has already outlined its plan to become the greenest government in history and reducing energy consumption generally is one of the EU’s main goals.

The UK has pledged to reduce its CO2 emissions by 20 percent in time for 2020 and a major part of this strategy is the introduction of the Green Deal, a home energy efficiency policy aimed at reducing household energy wastage.

Yet, it will be inconceivable for Chris Huhne, in his role as secretary of state for energy and climate change, not to explore the opportunities to decrease carbon emissions from inefficient commercial property.

There is significant potential for reducing consumption as 40 percent of our energy is consumed in buildings by heating, hot water, cooling, ventilation and lighting. It is said that commercial buildings pump out more than a third of London’s carbon emissions. Faced with such figures, it is inevitable commercial EPCs will follow a similar path to residential EPCs and become a much more widely recognised tool in the fight against climate change.

Lack of awareness
EPCs are more commonly associated with homes and were required as part of Home Information Packs (HIPs) for the sale oa property. Though HIPs were recently abolished on residential property, EPCs have remained in place as they are seen as an effective way of identifying  carbon outputs for buildings.

Now they are  of equal importance for commercial properties. If you are selling, renting or building a commercial property you need a commercial EPC. Some industry experts suggest, however, there is only a 20 percent uptake – meaning 80 percent of commercial properties are not being assessed as per legislation. This is largely due to lack of awareness.

Although the commercial EPC requirement has been mandatory since 2008, many private landlords have chosen to ignore it. The penalty for failing to make an EPC available to a prospective buyer or tenant when selling or letting non-dwellings is fixed, in most cases, at 12.5 percent of the rateable value of the building. It is important that landlords don’t presume it is the responsibility of the letting agent – it is not.

The fines are supposed to be enforced by trading standards. However, with the system still relatively in its infancy, at present the clampdown isn’t very thorough. It may be for this reason a large proportion of landlords and agents are yet to get into the routine of EPC assessments and why there is still a high proportion of property owners who are completely unaware of the legislation.

Worryingly, some commercial property professionals have stated they have no intention of complying with commercial EPC guidelines and will take the risk of substantial fines.  EPCs have gone past the phasing in stage now however, so it is more than likely there will be a clampdown in the near future with tougher penalties imposed.

The future of EPCs
From December this year, the second cast of the Energy Performance of Buildings Directive (EPBD), will be introduced. This EU legislation is likely to state that all property marketing brochures, including commercial, must display the EPC graph. This will lead to a huge uptake in commercial EPCs as they can no longer be swept under the carpet.

Saving energy is becoming big business. Toolkits helping businesses cut down their carbon emissions and save money on their energy bills in the process are becoming increasingly popular. There is also a growing culture of environmental protectionism and sustainability consideration.

The significant level of emissions produced by commercial property in the UK, coupled with an increasing number of businesses and organisations looking to maximise their corporate and social responsibility programmes, will mean the commercial EPC will play an increasingly important role moving forward.

The EPC is the only mechanic available to accurately measure energy performance and the recommendations contained within the EPC will be used by the Department for Communities and Local Government to meet strict emissions targets.

With residential property it is proposed that recommendations contained within the household EPC will form the basis for loans to be granted for energy efficiency improvements. It is probable commercial property grants or loans will, in time, be based on the same criteria.

The exceptions
There are exceptions where an EPC is not required but these are few and far between. Examples include places of worship, non-residential agricultural buildings with low energy demand and temporary buildings planned for less than two years’ usage. On the other hand, a commercial property which is split into parts, to be used as separate accommodation for instance, may need separate EPCs.

Currently, the EPC is usually commissioned at the end of the sales process at the same time as the conveyancing. This is because the solicitor will be unable to complete the transaction without this documentation being in place.

However, this goes against the nature of the EPBD which says the EPC must be made available to the prospective purchaser or tenant to help them make an informed decision. This is particularly crucial in the commercial sector, as a poorly performing commercial building will impact greatly on future energy bills.

In addition to compliancy issues and helping the environment, the EPC for commercial property buyers is about saving money. In this sense, a current EPC can be an additional marketing tool for the agent to promote the efficiency of the commercial property in question. Undoubtedly, energy efficiency is sharply moving up the commercial property wish list for businesses re-locating.

EPC providers can do more than issue certificates and help you obey rules. They can give valuable recommendations for improvements which will benefit businesses and the environment and cut costs in the long term. Some of these improvements may even help boost the value of the property.

As the nature of commercial buildings varies vastly some people hastily jump to the conclusion that obtaining a commercial EPC will be a complicated process. Yet with the right help it can be a very simple process. Compared to the potential fines for not having one, it’s a cost effective decision to make as well.