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The Energy Act - Implications For Landlords

Written by: Richard Roe on Monday 10/06/2013

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It is already well documented that the changes to the Energy Act 2011 will make it unlawful to let buildings with EPC Grades F and G from April 2018, but what should landlords be considering now?

Background

Under the powers of the Act, we expect the Regulation to be introduced to prevent Landlords letting a building which has an EPC Rating of F or G until it has complied with the obligations to make relevant energy improvements to secure a rating of E or above. One way of demonstrating compliance will be to undertake energy improvements under an approved scheme such as the Green Deal.

The Issue

What nobody has considered to date though is the tenancies currently being entered into for 5 years or more which could result in a property being returned to a landlord with an EPC Rating worse than when initially Let.

Whilst it is now standard for commercial leases to include repair, reinstatement, redecoration and statutory compliance obligations, none contain Energy Efficiency Requirements. Therefore a landlord can unwittingly lease a property to a tenant who may repair or alter the property in accordance with the lease but actually worsen the EPC Rating, for example by installing additional or different light fittings or using different non-energy efficient materials for repair.

Solution

The preferred solution is for the landlord to give early consideration to the Energy Efficiency of a building and commence repairs prior to the tenant entering into the lease. Failing this and where a tenant wants to enter the building as soon as possible then we would recommend that the landlord consider the inclusion of a standard clause within the lease requiring the property to be returned with the same EPC Rating as at the outset of the Lease.

How Eddisons Can Assist

Our Commercial Property Management and Building & Project Consultancy teams are perfectly placed to review any proposed alterations by tenants to properties and ensure these are compliant with the lease and do not worsen the Energy Efficiency.

Our Building & Project Consultancy team are able to provide pre-lease advice to a landlord, in conjunction with their legal advisors, against pitfalls in repairing liabilities in order to ensure landlords are fully protected against the requirements of the Energy Bill.

For more information on how we can assist, please contact David Wood on 0161 831 9444 or email david.wood@eddisons.com

By Carl Gledhill 

Written by: Richard Roe on Monday 10/06/2013

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About the author

Richard joined Eddisons in 2003 and has been the Managing Partner since 2012, a role that sees him lead the strategic direction and development of the business under the ownership of Begbies Traynor Group plc. Richard has been instrumental in the growth of the business which has seen turnover more than double since 2008.

In addition to his role as Managing Partner, Richard continues to play a vital role with key clients, particularly in the banking sector, where he is a trusted adviser to major high street clearing banks. Over the last eight years, Richard has been appointed LPA Receiver on many high profile properties and assists in the recovery of distressed loan portfolios.

Prior to joining Eddisons, Richard worked in the real estate division of a 'Big Four' firm where his notable assignments included the privatisation of Saudi Telecom for flotation on the New York Stock Exchange.

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