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24th July 2019

The Common Misconception that a Listed Building is exempt from the requirement to obtain an Energy Performance Certificate

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Since the enactment of the The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 which introduced the requirement for landlords of commercial buildings to obtain an Energy Performance Certificate (‘EPC’) before selling or letting a property, there has been a widespread misconception that an EPC is not required for a listed building. This is not necessarily the case. The MEES Regulation 2015 requires all commercial properties (before letting) that require an EPC to have a minimum energy rating of an ‘E’ and any landlord granting a new lease after April 2018 who fails to achieve this minimum energy rating will risk receiving a large fine (based on the rateable value of the property of up to £150,000).

Section 5 of the Energy Performance of Buildings (England and Wales) Regulations 2012 confirms that an EPC is not required for a listed building where compliance with the minimum energy performance requirements (i.e. achieving a minimum rating of an ‘E’) would “unacceptably alter the character or appearance of a building”. However, a way to assess whether there are any works that could be carried out to the property which could improve its energy rating to the minimum required, is to commission an EPC with an attached Recommendation Report which would confirm whether or not there are measures that could be taken to improve the rating of the property.

It is only once the EPC is commissioned and the Recommendation Report issued that a landlord (or its surveyor) will be able to assess whether any of the measures suggested in the Recommendation Report would unacceptably alter the character of appearance of the property. This test is not necessarily for the landlord to assess and evidence must be produced to the exemption authority in order to establish that the test is satisfied. This includes obtaining evidence from the local planning authority confirming that some or all of the recommended works listed in the Recommendation Report are not permitted under planning law.

If some of the works are permitted by planning then the landlord must carry these out and having done so, if the works manage to achieve an improved rating of at least an ‘E’ then the surveyor will reassess the property and reissue the EPC. If however, the energy rating of the property still falls below an ‘E’ rating despite the works being carried out, then in order to avoid incurring a fine, a landlord would need to obtain an exemption before the new lease is granted (as opposed to a renewal lease). This can be done by completing an online application at https://prsregister.beis.gov.uk and uploading a copy of the EPC and Recommendation Report with the relevant planning/surveyor’s evidence. An exemption certificate will then be issued which will be valid for 5 years, after which time a new EPC will need to be commissioned and any further recommended works carried out, if permitted.

There is a danger in commissioning an EPC report in that this in itself can trigger a requirement to comply with MEES if an EPC is issued and it’s below the minimum rating. . Therefore, another option that can help in establishing whether or not MEES applies is to take advice from a suitably qualified surveyor as to what such a report is likely to reveal in advance of commissioning it.

There are of course also other exemptions that can be relied upon regardless of whether or not the property is a listed building and these include the following:

  1. The works would reduce the property’s value by more than 5% or result in damage (a surveyor would need to confirm this and a copy report provided to the exemption authority);
  2. The works cannot be done as permission cannot be obtained to carry such works out;
  3. All cost-effective energy efficiency improvements have been carried out or there are none that can be made and the property remains sub-standard. For this purpose, cost-effective means that improvements pay for themselves within seven years, based on a formula set out in the MEES regulations.
It can be seen from the above that interpretation of the MEEs Regulations is not straight forward. This is not an issue that is going away as it is anticipated that the minimum energy rating will in time be increased from an E to a D and then potentially further to a C. For further information please contact Maria Hearne on 01223 447445 or click here to email Maria.