A Landlord’s Guide to EPC Ratings for Commercial Buildings

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22 July 2021

For commercial real estate landlords, the incoming Minimum Energy Efficiency Standards regulations mean energy-efficient buildings will go from being a “nice to have” to a legal requirement. 

Standards to tackle the performance of commercial buildings have been in place for some time, but new guidance will seek to drive improvements in the performance of existing real estate.

The energy we use for heating and powering our non-domestic buildings is responsible for around 12 per cent of the UK’s emissions. Around 60 per cent of today’s non-domestic buildings will still exist in 2050, representing around 40-45 per cent of the total floor space.

 

What is an EPC Rating for Commercial Buildings?

 

An Energy Performance Certificate (EPC) is a certificate (and associated report) that sets out the energy efficiency rating of a property and contains recommendations for ways in which the efficiency of the property could be improved. 

Virtually all domestic and non-domestic buildings sold, rented out or constructed since 2008 must have an EPC. An EPC may also be required when a property is altered in particular ways.

As part of the UK government’s net-zero by 2050 pledge, under the Minimum Energy Efficiency Standards (MEES), first introduced in 2018, it’s unlawful for landlords to grant new leases or renewals of existing ones on commercial properties with an Energy Performance Certificate (EPC) below E. 

At the beginning of the process, the government estimated that nearly one in five commercial properties could not achieve a rating above F. By April 2023, MEES will apply to all privately rented property, making it an offence to continue to let a commercial space with an F or G EPC rating even in the middle of a lease term.

Shane Betts, Head of Corporate Accounts at Integral UK (a JLL Company), looks at what the new rules mean for commercial properties and what the risks are for landlords that fall foul of the regulatory changes here.

Additionally, a government consultation was held from March-June 2021 in which the future trajectory for the non-domestic MEES to be upgraded to EPC B by 2030 was discussed. Feedback from the consultation will be available in due course.

 

How is an EPC Rating for a Commercial Building Calculated?

 

An EPC rating is based on several factors, from the construction materials to the lighting used inside. 

A qualified Non-Domestic Energy Assessor (NDEA) will examine the size of the building, the cavity wall and attic insulation, and HVAC system to assess the energy efficiency grade.

EPC Certificates are graded on a scale of A-G. The best result you can achieve is an A grade (most efficient) and the lowest being G (least efficient). 

An A result has a rating of 0-25. A zero-rating is defined as the performance of the building that has zero net annual CO2 emissions.

 

What About Listed Commercial Buildings?

 

There is a common misunderstanding relating to listed buildings and whether they are exempt from the requirement to obtain an EPC. 

Listed properties, and buildings within a conservation area, will not necessarily be exempt from the requirement to have a valid EPC and it’s down to the owner of a listed building to understand whether or not their property is required to have an EPC. 

An EPC is not currently required for a listed property or building within a conservation area when it is sold or rented in so far as compliance with minimum energy performance requirements would unacceptably alter its character or appearance. 

Examples of energy performance measures which may alter character or appearance (or as a minimum are likely to require local authority planning permission to install on a listed building) include external solid wall insulation, replacement glazing, solar panels, or an external wall mounted air source heat pump. Where character or appearance would not be altered by compliance with energy performance requirements, an EPC may be legally required. 

 

Picture: a photograph of some wall insulation

 

How Can I Improve My EPC Rating?

 

Shane Betts from Integral UK advises that there are numerous ways to improve the energy efficiency of a commercial property, including:

 

• Insulation – Poorly insulated roofs and walls can have a massive impact on the EPC rating. Landlords should consider adding insulation to solid brick or metal-clad properties, especially where there are cavity walls.
• Heating and cooling – Old HVAC plant and equipment can be a significant factor in energy emissions. Effective solutions include the installation of more efficient boilers, variable-speed heating and cooling pumps and high-efficiency chillers
• Lighting – Many commercial properties with a low EPC rating will have inefficient lighting systems. Simple steps like replacing older fluorescent tubes and halogen bulbs with LEDs or more modern fluorescent lighting can produce substantial savings. As with heating, lighting controls can also dramatically reduce energy wastage in unused areas of the property.
• Predictive maintenance – Investing in predictive maintenance is crucial. After installing sensors on the assets, equipment and distribution networks in a commercial property, engineering teams can track energy efficiency and calculate when systems may begin to underperform. In turn, these insights will give landlords the data-rich evidence they need to invest in more energy-efficient systems or renewable energy sources.

 

Picture: a photograph of a large commercial building

Article written by Ella Tansley | Published 22 July 2021

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