An Energy Performance Certificate or EPC is a measure of the energy efficiency of a building. Variables such as heating, lighting, installation, air quality and carbon dioxide emissions are assessed and compared to a benchmark. The building is then allocated a rating between A (most efficient) and G (least efficient). The good news is that the better the energy rating, the lower fuel bills are likely to be. In additional to the EPC itself, an advisory report is also supplied and this must be kept with the EPC.

When is an EPC required?

EPCs are required on the construction, sale and rental of commercial property of more than 2,500 m2 and have been since 1 July 2008. However, from 1 October 2008, EPCs are required on the construction, sale and rental of all commercial property regardless of the size. The requirement for an EPC is triggered on the sale of a property or the grant of a lease or sub-lease. In the current market where many retailers are looking to sell or sub-lease stores, this is another hurdle to jump. However, guidance notes issued seem to suggest that an EPC is not required for a lease renewal, extension or surrender or compulsory purchase order.

How long is an EPC valid for?

Ten years.

Who carries out an EPC?

Registered assessors.

What are DECs?

Display Energy Certificates or DECs apply to buildings with more than 1,000m2 of useful floor space that are occupied by public authorities or bodies providing a public service. Retailers need not worry as this only applies to buildings such as local authority buildings, courts, hospitals, schools and stations. Retailers who operate from stations may need to take note as this could apply to them.

Will my air-conditioning system or boiler need to be inspected?

From 4 January 2009 air conditioning units of more than 250KW will need to inspected. This is reduced to 12KW from 4 January 2011. Inspections will be required every five years. As with the EPCs, advisory reports on increasing efficiency are to be supplied and registered with the local authority. Advice will also be supplied in relation to increasing the efficiency of heating systems.

What are the penalties?

Fines range from £500 to £5,000 for not supplying an EPC on a sale or letting. This is calculated by reference to the rateable value of the property.

Any practical tips to note?

Yes. Landlords may find it difficult to recoup the cost of an EPC, especially where the assignment of a lease of one tenant in a block or shopping centre triggers the need for the whole block or the common parts to be assessed. It may be that a landlord can apportion the cost between the tenants but those with no desire to assign or sublet will be reluctant to contribute. We suggest dealing with this in the body of the lease itself possibly with a specific reference to the cost of an EPC in the service charge provisions.