5 June 2015 by

Landlord Alert

From 1 April 2018, landlords of commercial premises will be required by law to upgrade the energy efficiency of their properties to the minimum standard of band ‘E’ before the property can be leased to a new tenant or an existing tenant can renew its lease. These new regulations form part of the government’s increasing focus on combating climate change and will be extended to cover all leases by 2023.

The new regulations will only apply to landlords of tenanted properties and not owner-occupied properties or the tenants themselves. The latter though is subject to some exceptions – for instance, it may be possible for a tenant to become an “accidental” landlord by sub-letting surplus space, in which case the regulations will apply to the tenant in that capacity.

The regulations will also exclude properties let on a lease for a term of six months or less, provided that the same tenant has not occupied the property for over 12 months, or where the lease is for 99 years or more.

Limited exceptions will also apply if the landlord’s expenses to undertake the necessary works, in order to comply with the new requirements, are not cost effective.

In the period leading up to 1 April 2018, landlords with a low Energy Performance Certificate rating have 3 years to decide if they want to carry out improvement works or if they wish to claim for an exemption. In any case, doing nothing is not an option in the medium-term.

Landlords should be aware that there can be substantial fines for non-compliance and should look toward preparing their property to meet the minimum requirements before the new regulations come into force. A fine for a non-compliant property could cost a landlord the greater of £10,000 or 20% of the rateable value of the property. This is a substantial commercial risk but can be easily mitigated with some careful planning.

Please feel free to contact us on 0207 288 4700 if you have any queries or feel free to email us at info@boltburdon.co.uk

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