Energy Performance and Commercial Leases

Landlords should take action now to avoid being stung by changes due to come into law in April 2023

Landlords of commercial property will be well aware of their obligation to provide an Energy Performance Certificate (EPC) with a rating of E or better to a prospective new Tenant, prior to the grant of a Lease to them.

However, from April 2023, Landlords of commercial property can face fines up to a maximum of £150,000 if at any time during a commercial Lease term they are not able to produce a valid EPC showing an energy efficiency rating of E or higher. The same can apply to Tenants who sub-let their property.

There are some buildings exempt from the requirement to provide an EPC altogether, but these exemptions must be considered carefully (for example it is a common misconception that all listed buildings are automatically exempt).

Where a property is not automatically exempt, there are also some specific exemptions from complying with these upcoming changes, but a builder or surveyor’s advice may be needed and most exemptions can only be claimed for 5 years and must be registered centrally.

Commercial Property Landlords should check the EPC ratings across all their properties now and consider which will soon need new EPCs and which may require improvement works to improve their energy efficiency rating. It has also been proposed by the government that all commercial properties should have a rating of C or higher by 2017 and B or higher by 2030, so Landlords should consider the costs and benefits of investing in long-term improvements now.

Else Solicitors can advise landlord and tenants on the terms of existing Leases, and whether the cost of energy efficiency works can be passed on to a Tenant. We also have a great deal of experience in acting for landlords and tenants in connection with new commercial property leases and advising them on their respective obligations for energy performance and efficiency. We also assist property investors purchasing new commercial properties subject to existing leases and advise them on their responsibilities.

To discuss your commercial property needs, please contact or 01283 526 200.

Share This

Copy Link to Clipboard