Energy Act 2011 impact on landlords and tenants – Energy Performance Certificates

Martin Zambrano, Director of Luis & Bell Surveyors explains what Energy Performance Certificates are and why, after the Energy Act 2011, landlords will need a good EPC by 2018.

An Energy Performance Certificate is produced whenever a building is sold, constructed or rented out. The EPC shows the energy efficiency of a property and includes recommendations on how it can be improved.

The Energy Act 2011 provisions mean that all landlords will need to have an EPC with a rating “E” or higher at the very latest by 2018, to rent or, it appears, to continue renting. It’s crucial for landlords to plan and act now, not least in the domestic private sector where from April 1 2016 tenants can apply for energy efficient improvements and this cannot be refused if reasonable.

Energy Performance Certificates (EPCs) were introduced in England and Wales in August 2007 in line with European Union Directive 2002/91/EC relating to the energy performance of buildings.

EPC’s come in all shapes and sizes:

• Com EPC
• Dom EPC
• DEC
• TM44
• French EPC (?)
• European directive?

EPCs are lodged on the domestic or non-domestic Performance Certificate registers such as Landmark. Certificate statistics for April 2012 show:

• More than 8.1 million EPCs for dwellings
• 485,912 EPCs for non-domestic buildings
• 185,151 Display Energy Certificates for buildings occupied by a public authority
• 19,149 TM44 – AC reports

How are energy performance certificates assessed?

An energy assessment for a non-dwelling must be carried out by an energy assessor who is a current member of an accreditation scheme (Elmhurst, Stroma, RICS, CIBSE). Energy assessors must act in an independent manner and also ensure that the certificate is lodged on the central non-domestic EPC register, which is postcode searchable.

Accreditation schemes must make adequate provision to ensure that the energy assessment is carried out in an independent manner.

Complex energy rating

The energy rating of a building is a complex calculation which is based on a combination of factors with most important:

• Type of construction of the building, including walls, roofs, floors, glazing.
• Whether the parts or zones of a building are used for different purposes such as office and factory and the occupancy profile for each zone (heating, cooling ventilation, hot water systems, lighting).
• Lighting and HVAC are among key elements here.

Data collected from each assessment will be fed into an approved software package such as DesignBuilder, G-ISBEM or EPBD-NCM. This software will use the information provided by the energy assessor and standard tables will produce the EPC with a recommendation report.

The report will help owners and occupiers to improve the energy of a building. The recommendations only include those improvements that are appropriate, giving basic advice on the short, medium and long-term payback.

Building regulation changes

April 2014 building regulation changes means there will be a 9% aggregate reduction in the Target Emission Rate (TER) compared with 2010 levels across the build mix. The TER is calculated using a notional building of the same size and shape, together with further notional building scenarios that account for different daylighting scenarios:

• Hotel 12%
• Distribution warehouse 4%
• Retail warehouse 8%
• Small warehouse 3%
• Shallow plan office 13%
• Deep plan office with AC 12%
• School 9%

Domestic EPC’s

In the domestic sector, an assessor visits the property and checks loft insulation, domestic boiler, hot water tank, radiators, windows (double glazing) and so on. This data is processed in a software package to provide a number for the rating of energy efficiency and a recommended value of the potential for improvement with similar figures for environmental impact.

A table of estimated annual energy bills and potential for improvement is also given, without reference to householder bills. A survey costs around £60 for a four-bedroom house and with minimal disturbance – assessors make assumptions on insulation properties in the property based on age and construction type, which would be changed in light of visual or written evidence to support the presence of post-build insulation being installed.

We help clients with legislative compliance and providing measurable energy efficiency solutions. Services are designed to reduce the adverse environmental impact of energy and focus on:

• Energy Performance Certificates (EPC’s)
• Display Energy Certificates (DEC’s)
• Air Con Assessments (TM44)
• Building Performance Assessments (Energy Audits)

Our advice for landlords is to ensure that they have an up-to-date EPC as soon as possible. It is better to know now if energy efficiency works are needed but also to be sure that there is no negative impact on property valuations, rather the reverse.