EPCs – Cutting out complexity: What landlords need to look out for.

EPCs don’t have to be as complicated or as costly as people believe – you just need to know what to look out for.

Technical complexity combined with fear of spiralling costs and mistrust of changing legislation have gone someway to account for 43% of property firms [Property Week 27.05.16 Page 1], not preparing themselves for the Minimum Energy Efficiency Standards (MEES) changes in 2018 and others to purchase ineffective Energy Performance Certificates (EPCs).

But with a looming deadline and a renewed focus on the importance of MEES, as after April 2018 a non-domestic property cannot be let unless it complies with regulations, what should be on the radar of investor landlords, and how do we defeat the rogue EPC assessors?

It is the building information that is of value and that drives the accuracy of energy performance certificates. In today’s market, with so many insecure ratings, any reassessment will no longer rely solely on the certificate but assess the background information instead. Those higher ratings that do not have the detail to corroborate may be downgraded.

Sourcing data on construction, materials used and services installed in the building will improve the accuracy of an assessors rating. Archived documentation, approaching a building surveyor or services consultant will help the assessor produce a reliable rating, and can potentially deliver an improved rating.

If the assessor is checking the building, who is checking the assessor? Only a team independent of each other will provide the right information that can turn your potentially F rated building into one that is energy efficient and services compliant.

People fear the worst, but a review of your building may conclude there’s no drastic cost implication, rather simple changes to make over a period of time, such as lighting improvements.  The recommendations should inform the decision of what improvements to make; appointing a single, (and unknowledgeable) assessor, without an understanding of building construction will cost more in the long run.

With only two years to go, the problem seems imminent for landlords with multiple assets, but when regulation comes into effect in April 2018, there may be margin within the timeframe to make improvements.

If works required are cost effective against capital expenditure then there’s no defence, but if payback for costs is going to take time then additional time may be granted to complete the works – as long as they are proven to be recognised and in the pipeline.

Landlords also need to be aware of their tenant’s plans; It is common for fit outs to be undertaken by a tenant but these works could affect the EPC rating. It is feasible that a landlord will not want a tenant to remove certain aspects of a fit out on the expiry of a lease but a tenant might also dispute repair on the basis that the landlord needs to replace or undertake a wider package of works to comply with MEES. With this in mind a more collaborative approach should develop when signing a lease; in both cases the accuracy of the data will be essential.

A good EPC rating will place your building stock as first tier compared to the non-compliant, and the increasing value of sustainability and wellbeing will drive tenants to buildings that have a positive impact on people and the environment. It is the level of information that will determine an EPC and credible information will become king to inform the decision makers.

 For any further information on EPC Management contact Andrew Jenkins.