Energy Performance Certificates (June 2009)

One of the main aims of the Energy Performance of Buildings Directive (2002/91/EC) ("the Directive") was to promote improved energy performance of both commercial and residential buildings within the EU.  The Directive has significant implications for developers, owners, occupiers and managers of buildings.
 
The Directive now has direct force in England and Wales by virtue of regulations that require Energy Performance Certificates ("EPC") to be issued when commercial and / or residential buildings are sold or let.
 
An EPC is a certificate containing certain information about the energy efficiency of a building and must be accompanied by a recommendation report. An EPC must be supplied when a building is to be sold or rented out.  The seller or landlord must provide any prospective buyer or tenant with a valid EPC and a recommendation report.  The EPC must be supplied by the seller or landlord free of charge and must be provided at the earliest opportunity in the transaction. The general rule is that an EPC is valid for ten years from the date on which it was issued. However, in certain situations, a valid EPC for a building will be revoked if a new EPC is issued for the building. 
 
There are some exceptions where an EPC is not required: on construction, sale or rent of any of the following types of buildings:

• Buildings which are used primarily or solely as places of worship;
• Temporary buildings with a planned time of use of two years or less;
• Industrial sites and workshops with low energy demand;
• Non-residential agricultural buildings with low energy demand; and
• Stand-alone buildings with a total useful floor area of less than 50 square metres, which are not dwellings.

The following transactions are not considered to equate to 'selling' or 'renting out' and therefore do not require an EPC:

• Lease renewals or extensions;
• Compulsory purchase orders;
• Lease surrenders; and
• Sales of shares in a company where buildings remain in company ownership.

The Regulations do not require an EPC to be provided for off-plan sales or lettings before the construction of the building has been completed.

Where a property is marketed before it is physically complete AND a Home Information Pack ("HIP") is required, the HIP must include a Predicted Energy Assessment.  Once the building has been constructed, the Predicted Energy Assessment will be replaced by an EPC.

The requirements for EPCs are more complicated in relation to flats, multi-let buildings and mixed-use properties and it is advisable to seek specialist legal advice.

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