Listed buildings: are they exempt from EPC and MEES restrictions on sales and lettings?
The requirements to provide an energy performance certificate ('EPC') on the sale or letting of a property and the requirement to commission an EPC before a property is marketed are well known. In addition to these requirements, minimum level of energy efficiency standards ("MEES") will come into effect for both non domestic private rented properties and domestic private rented properties in 2018. These rules include restrictions on letting of properties with energy efficiency standards which fall below the prescribed standard.
In relation to all these requirements there appears to be an exemption for listed buildings. A quick read of the relevant legislation may give the mistaken impression that listed buildings are automatically exempt. In fact the position is more complicated and requires a building by building assessment against a backdrop of inconsistent guidance. This ambiguity can lead to arguments between buyers and sellers, landlords and tenants and possibly enforcement action, if the relevant authorities disagree with the assessment made.
Section 5 of The Energy Performance of Buildings (England and Wales) Regulations 2012 ("2012 Regulations"), provides an exemption from the EPC requirements for buildings defined as:
"buildings officially protected as part of a designated environment or because of their special architectural or historical merit, in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance;"
Guidance on both the Government and Historic England websites on the EPC requirements indicates that listed buildings are exempt from the EPC requirements, although the Government website does state that advice should be sought from the relevant local authority conservation officer if the work would alter the building’s character.
A strict interpretation of the 2012 regulations would first require an assessment as to whether or not compliance with EPC requirements would "unacceptably alter the character or appearance" of a building. Only if the requirements would alter the character or appearance in this way will the building be exempt from the EPC obligations.
The regulations governing the new MEES are the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 as amended ("MEES Regulation"). These regulations impose restrictions and obligations on the owners of certain properties, which include a restriction on leasing a property with less than a prescribed minimum EPC rating (unless the landlord registers an exemption). However, as the properties affected by these regulations are those which are required to have an EPC, effectively the same exclusions apply under both EPC and MEES regulations.
What is a listed building?
The legal definition of a listed building is contained within section 1(5) of the Planning (Listed Buildings and Conservation Areas) Act 1990 as "a building which is included in a list compiled or approved by the Secretary of State". Historic England has published numerous guides concerning the different classes of historical buildings and their determining criteria on its website. Historic England states in its guidance that:
"a listing is not a preservation order, preventing change. It does not freeze a building in time, it simply means that listed building consent must be applied for in order to make any changes to that building which might affect its special interest."
From this explanation it is clear that alterations to listed buildings are envisaged. It is simply that listed building consent must first be obtained to any proposed changes.
What does this mean?
It is not clear from the 2012 Regulations who should make the assessment as to the alteration of the character or appearance of the listed building mentioned in the exemption. If it is the owner of the building who can make that assessment and if they decide that an alteration would affect the character of the building and they rely on the exemption in the 2012 regulations, then what happens if, subsequently, the assessment is challenged and it is found that the owner was not entitled to rely on the exemption?
The ambiguity of the section 5 exemption coupled with the lack of clarity in the accompanying guidance, could lead to disputes between sellers and buyers or landlords and tenants over the question as to whether compliance with the 2012 regulations and the MEES is required on a particular transaction.
Any failure to comply with the regulations could also lead to enforcement action against the owner by the appropriate authority.
The 2012 Regulations provide that a trading standards officer has the power to request a copy of the EPC for inspection from the landowner. If requested, the EPC must be produced within seven days, failing which, a penalty charge notice could be issued.
The penalty charge for a breach of duty under S6 of the 2012 Regulations (the duty to produce an EPC on sale or letting of a building) where the building is a dwelling is £200. Where the building is not a dwelling, it is calculated by 12.5% of the rateable value of the building. Additional penalties apply under the MEES regulation.
It is worth noting that under section 43(1) of the 2012 Regulations, a person who obstructs an officer of an enforcement authority acting in pursuance of enforcement is guilty of an offence, punishable by an unlimited fine.
The current position regarding listed buildings is ambiguous and leaves parties to both sales and lettings of listed buildings vulnerable to challenge both between themselves and by the relevant authorities. Landowners contemplating the sale, purchase or lease of a listed building would be well advised to seek detailed advice on this issue in light of the nature of the building, its listing category and the likely outcome of an assessment under section 5 of the 2012 regulations. A report could be commissioned from an appropriately qualified surveyor or other professional to support the landowner's position and provide evidence of an assessment. If the outcome remains uncertain, it may be prudent in the long term for the landowner to take steps to comply with the various regulations or to seek an opinion from the relevant listed building officer, rather than rely on an ambiguous exemption.