Just how energy efficient is your commercial property?

• Posted onNovember 30, 2017

Energy Efficiency

New regulations which come into effect on 1 April 2018 require all properties to achieve a minimum standard of energy efficiency. Can you be sure that your property is compliant? As from 1 April 2018 landlords will no longer be able to grant a lease, or renew an existing lease, of commercial premises with an energy rating less than E.

A landlord who continues to let a commercial property which does not meet the minimum requirements after 1 April 2023 will be in breach of the Regulations. This includes properties where a lease is already in place and a tenant is in occupation of the property.

Whilst there are some temporary exemptions which may apply, any landlord who leases a property which does not meet the minimum requirements will be liable to enforcement action. This can include a financial penalty of up to £10,000 or 20% of the rateable value of the property (up to a maximum of £150,000) and publication in a register of the details of the breach.

The regulations do not apply to short leases of less than 6 months or long leases granted for a term of 99 years or more. However, many leases being granted now, or even existing leases, will extend beyond 1 April 2023. Does your lease adequately address these issues? Who is responsible for carrying out any energy improvement works needed? Does the landlord have a right to enter the property to carry out energy efficiency improvement works? Who is responsible for the cost of those works? Does the landlord have a right to break the lease if continuing to let the property would put the landlord in breach of the regulations? These are just a few of the potential issues which may arise. Landlords and tenants are encouraged to consider and address these issues now, well in advance of the 1 April 2023 deadline.

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