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Why you Shouldn’t Just Accept your Commercial Building’s EPC rating

After the new MEES Regulations came into effect on 1st April 2018, landlords can no longer let or renew a lease on qualifying commercial properties with an Energy Performance Certificate (EPC) rating of ‘F’ or ‘G’. However, the assessment a commercial building receives may not always be a true reflection of its real energy performance, as a private client of Hicks Baker recently discovered.

The client was updating EPCs on a series of barn style properties when granting new leases to extend the occupation of a sitting tenant. Two of the buildings produced EPC ratings of less than ‘E’. The assessor’s recommended works to bring the buildings up to the minimum standard were not inexpensive!

The client sought advice from Hicks Baker’s building surveying team who noticed anomalies between the actual construction and some of the default assumptions made in the EPC assessment. As Hicks Baker’s Andy Colangelo explained:

“EPC Assessors work with standard Government approved software into which information about the building and its services is entered. Without specific information, for example about the level of insulation within the building fabric, default inputs may be used. In this case, these inputs produced results that did not accurately reflect the performance of the building.”

Hicks Baker queried the findings and provided additional evidence of the actual building performance. Once entered into the software, the data delivered much improved energy ratings that satisfied and, in the case of one building, significantly exceeded the minimum standard. The lease extensions could then be concluded without significant and unexpected expenditure.

Andy Colangelo commented:

“The solutions recommended in the original reports were prohibitively expensive and, as our analysis showed, unnecessary. We saved our client a significant amount of capital expenditure. The proposed leases were allowed to go ahead without delay thus retaining a key tenant on the estate.”

Should your EPC rating be better?

Commercial occupiers are ever more conscious of controlling energy costs and their carbon footprint. Properties with poorer assessments will be harder to let or sell.

Not all EPCs can and should be questioned, but the energy assessor needs to have as much information as possible about the building fabric to have the best chance of producing an accurate EPC report. Without sufficient information, default settings will be used, and an errors are much more likely.

Not all similar properties are the same…

When assessing a multi-tenanted block or similar units, an assessor may take the view that one unit is representative of all of the others. This is not always the case and can be open to challenge. In one recent example, the assessor assumed a building had a gas heating system when, in fact, it had ground source heat pumps- a significant difference in CO2 output!

Always make sure the assessor is familiar with the buildings and services of the types to be inspected. Assessments made using defaults are not necessarily incorrect, but they tend to assume a worst case scenario and may not provide a true reflection of a building’s rating. Building owners must make sure that an assessor is suitably briefed about the nature of the building and any improvement works carried out.

If you are a landlord, click here for more information or contact Andy Colangelo on 0118 955 7093a.colangelo@hicksbaker.co.uk or Stephen Head on 0118 955 7089s.head@hicksbaker.co.uk.