From 1st April 2018, Landlords could face up to a £150,000 fine from the government if their properties do not meet the requirements of the minimum energy efficiency standard regulations.
These regulations make it unlawful for a Landlord to let a property where the energy rating is below an ‘E’ on a valid Energy Performance Certificate (EPC). Government statistics show that 18% of commercial properties currently have an EPC rating of an ‘F’ or ‘G’ and 65% have a rating of a ‘D’ or below.
This may result in some Landlords needing to improve the energy efficiency of the building by way of energy efficiency improvements before being able to let the building. If the Landlord is already letting an unlawful property, the Landlord will have extended time to rectify the issues, until 1st April 2020 in the case of residential properties and until 1st April 2023 for commercial properties.
The breach of the EPC regulations does not invalidate the lease, however, the Landlord in breach will become liable to a civil penalty of up to £150,000.
Landlords may register for exemptions, but these are only in certain circumstances.
What can a Landlord do about costs?
Whether a Landlord can recover the costs of improving the energy rating from the tenant is a matter of contract and depends upon the drafting of the clauses in the lease. In relation to current leases, it would be pragmatic to have a solicitor review your lease and advise you on the provisions if you are unsure.
In leases being negotiated moving forward, Landlords should try to include express rights to recover energy efficiency and environmental performance improvements costs.