The government has now issued its response to the consultation on minimum energy efficiency standards for the commercial rented sector.
The response confirms what had been previously mooted:
- The regulations will apply to all non-domestic property, except those which are already exempt from the requirements of the EPC regime;
- The minimum energy efficiency rating will be ‘E’ – this mirrors the domestic property regime;
- Landlords will not be required to make energy efficiency improvements:
– which are not cost effective (i.e. cannot be repaid within 7 years or available under the Green Deal);
– where necessary consents cannot be obtained; or
– the measures will reduce a property’s value by 5% or more.
The regulations will come into effect on the 1 April 2018 and will apply to any new lease to new or existing tenants. From 1 April 2023, there will be a blanket application of the regulations, so the trigger will not be a new lease.
Enforcement will be by local authorities. Although it is expected that Trading Standards will undertake this function, local authorities will be able to choose. There will be a six month window for compliance.
Penalties for non-compliance will be twofold:
- For providing false information on the register, a penalty of £5,000 is stated in the response.
- For renting out a non-compliant property, there will be a sliding scale depending on the length of breach. The fines will be linked to the rateable value of the property. For infringements of less than 3 months, the fine will be 10% of the rateable value, but with a minimum penalty of £5,000 and a maximum of £50,000. For infringements of more than 3 months, the fine will be 20% of the rateable value, but with a minimum penalty of £10,000, and a maximum of £150,000.
The government will be drafting and issuing guidance shortly.
Read the full government response.
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