In recent years, following the UK’s commitment internationally to reducing our carbon footprint, the sale of real estate property in the UK has required an Energy Performance Certificate, which is often referred to as an “EPC”. All property for sale in the open market requires an EPC, subject to certain very limited exceptions. European Directives have also bolstered and enforce the UK’s commitment to doing so.
The EPC grades the energy-efficiency of a building upon a property and shows what scope there might be for improvement to reduce carbon emissions and energy consumption. This grade is improved through measures undertaken to a property, for example, installing cavity wall insulation, the latest energy-efficient boiler, light-bulbs, and even solar power. Sometimes government grant schemes are available through your energy provider to assist with reducing the carbon footprint of your home enabling you to have work undertaken for free.
On 6th April 2012, our UK legislation for England and Wales will be widened to implement the relevant Directives, so as to include the requirement of an EPC to lettings of a property. The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2011 (SI 2011/2452) makes a number of key changes, which one can predict could create difficulty initially. It may be prudent, therefore, to act now and obtain your EPC now before the initial upheaval.
EPCs are produced by Domestic Energy Assessors (DEAs) and as a result of the changes afoot, they will have to obtain a top-up qualification, otherwise they will not be allowed to be a DEA. Moreover, if they do not obtain the top-up qualification by October 2012, they will have to re-qualify and re-take the full DEA qualification. This is likely to put a great strain upon this aspect of the system of sale and letting of Property in the UK as DEAs have to undergo the change, and one wonders whether they may be in short supply, particularly were the economy to pick up. The extension of the requirement of EPCs to lettings will also tend to put pressure on rents and the Landlord’s bottom-line. The other main changes are:
- EPCs will need to be commissioned before marketing any buildings, whether residential or commercial, for sale, or to let;
- All reasonable efforts must be made to ensure that an EPC is obtained within 7 days of marketing a building and there is an absolute duty to have the EPC by the end of 21 days of then;
- Trading Standards Officers will have increased powers enabling them to force sellers, landlords and their estate agents or letting agents or other persons acting on their behalf to prove that an EPC has been commissioned and, ultimately, obtained within the timescales mentioned above. They will be able to issue penalty notices if evidence is not produced within 7 days;
- Full written property particulars and descriptions must be made available electronically and it will not be sufficient to include just the “asset rating”;
- Buyers or Tenants must be supplied with the EPC at the very earliest opportunity and not be delayed until just before the letting or sale (and it should certainly not come afterwards!)
- Air conditioning systems (above 12kW) must be inspected every 5 years and have an inspection report lodged upon the central EPC register (for which a lodgement fee can be charged)
- The format of the EPC itself will be revamped from 6th April 2012 and the changes will include a single energy efficiency graph, showing “Green Deal” recommendations for energy improvements with possible funding through the initiatives of the Coalition Government under the Energy Act 2011 under the auspices of the Department of Energy and Climate Change. The new innovative Green Deal financial mechanism eliminates the need to pay upfront for energy efficiency measures and instead is supposed to provide reassurances that the cost of the measures should be covered by savings on the electricity bill. A new Energy Company Obligation (“ECO”) will integrate with the Green Deal, with the idea of allowing supplier subsidy and Green Deal Finance to come together into one seamless offer to the consumer.
The decision-making process of encouraging homeowners and landlords to be energy efficient should be made easier by consumers and homeowners being compelled to have the EPC. However, the extra red-tape is something which we will all need to bear in mind and the cost of procuring the EPC will ultimately be passed down in one form or another, as well as being something additional to bear in mind if wishing to sell or let out properties. The wise will seek to allow as much time as possible to address the bureaucratic aspects of selling or letting out property with buildings. Properties bought “off-plan” will still need a predicted rating, but that’s another story again…