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An A to G of EPCs

14 July 08

With energy performance certificates about to arrive across the property market, the author explains what they require, and some issues they raise particularly in letting

by Alan Simpson


The property market has had to respond to numerous changes over the last few decades in response to requirements for energy conservation. For example the fuel crises of the 1970s led to changes in relation to heated buildings. Most recently the changes have been a response to environmental factors, with climate change and a reduced reliance on fossil fuels being very much to the forefront as the emission of carbon dioxide is considered to have a direct contribution to global warming.

As 18% of the UK’s carbon emissions comes from existing commercial buildings and a further 27% from existing homes, it is understandable why this has led to

a demand for buildings to be

energy efficient.

The recent impetus for change, which derives from targets set under the Kyoto Protocol and other agreements, has largely been driven by directives originating from the European Union, and with a raft of legislative measures in place the property market has to respond accordingly.

Energy Performance of Buildings Directive

The European Union Energy Performance of Buildings Directive of 2003 (EPBD), which promotes the improvement of the energy performance of new and existing buildings, is being implemented throughout Europe. The aim of the EPBD is to accelerate the low carbon transformation of the building stock in the whole of the EU, although it should be stressed that it is not a requirement to upgrade or improve existing buildings – rather it is a requirement to reduce carbon emissions and to make that reduction more visible.

However it is clear that the EPBD is going to have major implications for the property sector over the next few years and beyond. Accordingly it is necessary that all professionals who are involved in property, including the legal profession, ensure that they know what the EPBD involves.

Energy performance certificates

The implementation of the EPBD in Scotland, which applies to both residential and non-residential properties, involves the use of the energy performance certificate (EPC). This gives the “asset rating” for a building by showing its energy efficiency and environmental impact in terms of carbon dioxide emissions.

EPCs are valid for 10 years, which means that a new EPC is not required for every transaction during that period. They give buildings an A to G rating, with A being the least polluting (rather like the ratings given to white kitchen goods), and there are regulations which specify the information which must be displayed on the certificate. EPCs must have an accompanying advisory report which provides a list of cost-effective measures for improving the energy efficiency of the building. This report is valid for 10 years as well.

The requirement for an EPC is triggered by the sale of property or the grant of a lease or sublease – it would appear that the trigger does not operate on assignations, lease renewals, extensions, surrenders or compulsory purchase orders. Guidance is being issued to local authorities which may make the position clearer. An EPC must be provided by an owner or landlord to a prospective purchaser or tenant.

There are exceptions for buildings which do not require an EPC. These  include:

temporary buildings which have an intended life of less than two years;

certain types of building which do not use fuel or power for controlling the temperature within buildings (such as industrial sites, workshops and non-residential agricultural buildings); and

stand-alone buildings with a total useful floor area of less than 50 m2.

Public buildings

There are particular requirements for public buildings with a floor area of more than 1,000 square metres, for which an EPC will require to be on display from 4 January 2009. These are buildings:

which are occupied by public authorities and institutions providing public services to a large number of persons;

which are frequently visited, at least weekly, by members of the public;

where the public have a right of access to the building or those parts which provide services directly to the public; and  where public funding is used in the operation of the building or in the general upkeep or in funding staff costs.

Examples of such buildings are universities, colleges, commercial centres, concert halls, cinemas, theatres, schools, nurseries, sports centres, museums, hospitals, and local authority buildings.

EPCs for public buildings must be displayed in a prominent place. This is probably going to be at the reception area or main lobby of any building requiring one. EPCs for other buildings are subject to less stringent requirements as regards display and can be placed in a cupboard, for instance.s