Since 6 April 2008, Energy Performance Certificates (EPCs) have been required on the construction, sale or letting of buildings over 10,000m². From 1 July 2008 this was extended to buildings over 2,500 m² and from 1 October the requirement will apply to all buildings (with a few limited exceptions) when they are constructed, sold or let. For more details, see our analysis on EPCs.
There is a duty on the prospective seller or landlord to supply an EPC to the prospective buyer or tenant at the earliest opportunity. This means:
- when written information about the building is supplied to the prospective buyer or tenant (e.g. with the sales or letting particulars); or, if earlier,
- when the buyer or tenant views the building;
and in any event, before exchange of contracts.
What is the effect of the transitional provisions?
In March, regulations containing transitional provisions were introduced. Where the transitional provisions apply, the duty to provide an EPC is deferred until exchange of contracts. Following exchange, the seller/landlord must commission an EPC as soon as reasonably practicable and must then continue to use all reasonable efforts to obtain it.
The transitional provisions were due to expire on 1 October. After that, the seller or landlord would be under a duty to supply an EPC at the earliest opportunity and (at the latest) by exchange (see above).
The new regulations extend the transitional provisions for non-dwellings until 4 January 2009. This is the date by which the UK government must fully implement the Energy Performance of Buildings Directive under EU law. The extension does not cover dwellings, to which the original deadline of 1 October still applies.
In what circumstances do the transitional provisions apply?
As noted in a previous analysis in March 2008, it is not easy to bring a transaction within the transitional provisions. The following criteria must be satisfied:
- The building must be put on the market before the relevant commencement date (6 April, 1 July or 1 October – see above).
- Action must be taken before the commencement date to make public the fact that the building is on the market. Sales and lettings negotiated off-market are therefore unlikely to qualify.
- That action must be taken with the intention of selling or letting the building before the commencement date. It will be very hard to demonstrate an intention to complete before the relevant commencement date where the property was only put on the market shortly before that date.
- The action must be sustained to a reasonable extent after the property was put on the market and until the relevant commencement date.
- The building must remain on the market on the relevant commencement date. As previously discussed, it is unclear whether this will be interpreted to cover transactions in progress on the relevant commencement date, as well as those where a buyer or tenant has not yet been found. Otherwise, transactions where a property has been taken off the market pending exchange will fall foul of the regulations unless an EPC is provided to the buyer or tenant prior to exchange.
Where these criteria are met, the seller or landlord may need to reserve a right of access for the energy assessor to carry out the assessment to prepare the EPC, if there is a chance that the EPC may not be carried out until after completion. If this is not done, all is not lost. The regulations impose an obligation on every person with an interest in, or in occupation of, the building to co-operate to allow access for an energy assessor to inspect the building. The regulations also impose an obligation to co-operate with the seller or landlord to enable them to comply with their duty to provide the EPC.
What if the property is taken off the market after the commencement date?
Where a property is on the market at the relevant commencement date, but is subsequently taken off the market because the seller or landlord has accepted an offer to buy or rent the building, then in the event that that offer is subsequently withdrawn the transitional provisions will continue to apply provided the building is put back on the market within 28 days of the offer being withdrawn.
If the property is taken off the market after the commencement date in any other circumstances, the transitional provisions cease to apply. The usual duty to provide an EPC at the earliest opportunity will apply if the property once again becomes available for sale or let.
What are the other changes made by the new regulations?
The Secretary of State is obliged to maintain a register of EPCs. The register is maintained by Landmark Information Group and is accessible online. Currently, in order to search the register, it is necessary to have the reference number under which the EPC has been registered. In practice this means that the searcher must have a copy of the EPC.
Under the changes introduced by the new regulations, from 1 October it will be possible to search the register by using the address of the property concerned. This will reveal whether or not an EPC exists for that property and, if so, the date it was issued. It will not, however, reveal the registration number of that EPC, nor the EPC itself.
1 October is not just the long-stop date for implementation of EPCs on the sale or letting of commercial properties. Currently, all homes sold in circumstances where a Home Information Pack (HIP) is required must have an EPC. From 1 October, this will apply to any house or flat sale, regardless of whether a HIP is needed. However, the new regulations extend the validity of an EPC included in a HIP from 12 months to three years.
In addition, homes let on or after 1 October (e.g. on an Assured Shorthold Tenancy by a buy-to-let landlord) will also require an EPC.
It is an offence for any person (other than the owner or tenant of the building) in possession of an EPC to disclose that EPC, except in the circumstances set out in the regulations. Broadly, these are when disclosure is required by law (e.g. to a prospective buyer or tenant, or to an accreditation scheme or enforcement authority). The new regulations also permit the disclosure of EPCs of dwellings to the Energy Saving Trust Limited for the purpose of providing information on the improvement of energy performance.
Are there any defences available if a seller or landlord fails to provide an EPC when one is required?
A seller or landlord will not be liable to a penalty for failure to provide an EPC when required if he can demonstrate that:
- he made a request for an EPC at least 14 days before the relevant time; and
- he made all reasonable efforts and enquiries to obtain it.
The difficulty is in ascertaining the "relevant time". It will not necessarily be sufficient to make the request 14 days before exchange, as the duty to provide the EPC may have arisen at an earlier stage (see above). Nonetheless, this defence may prove useful where, due to the shortage of energy assessors, it will take some time from the instruction of the energy assessor before an EPC can actually be produced.
Display Energy Certificates
From 1 October, Display Energy Certificates (DECs) will also be required for buildings over 1,000m² occupied by a public authority or an institution providing public services to a large number of people, where that building is frequently visited by those people.
This analysis forms part of a suite of Wragge & Co guides to the Energy Performance of Buildings legislation: