Energy Performance Certificates for business premises

When you need an Energy Performance Certificate

An Energy Performance Certificate (EPC) rates a building's energy efficiency on a scale from A (most efficient) to G (least efficient). You need a valid EPC whenever you sell, let, or newly construct a commercial building in England or Wales. The certificate must be provided to prospective buyers or tenants and must be obtained before you market the property.

EPCs are produced by accredited energy assessors who inspect the building and assess its construction, heating systems, lighting, insulation, and other factors that affect energy performance. A valid EPC lasts for 10 years from the date of issue.

Failing to provide a valid EPC when required is a civil offence enforced by trading standards.

Minimum Energy Efficiency Standards (MEES)

Since 1 April 2023, the Minimum Energy Efficiency Standard (MEES) has applied to all commercial lettings in England and Wales, including existing tenancies. It is unlawful for a landlord to let or continue to let a commercial property with an EPC rating below E unless a valid exemption has been registered.

This is a significant compliance obligation for commercial landlords. If your property has an EPC rating of F or G, you must either make energy efficiency improvements to bring it to at least an E rating, or register a valid exemption on the PRS Exemptions Register.

Penalties for MEES non-compliance

Local authority trading standards enforce MEES. Penalties are calculated as a percentage of the property's rateable value:

• For a breach lasting less than 3 months, the penalty is the greater of £5,000 or 10% of rateable value, up to £50,000.
• For a breach lasting 3 months or more, it is the greater of £10,000 or 20% of rateable value, up to £150,000.

Penalties can be imposed repeatedly if non-compliance continues. The local authority also publishes details of the breach on the PRS Exemptions Register for at least 12 months.

EPC exemptions and the PRS Exemptions Register

Not all buildings require an EPC, and not all landlords are required to meet the MEES minimum E rating. However, exemptions must be understood precisely - claiming an exemption incorrectly does not protect you from enforcement.

Buildings exempt from EPC requirements

The following building types are exempt from the requirement to have an EPC:

• listed buildings, where meeting minimum energy performance requirements would unacceptably alter their character or appearance
• buildings used mainly as places of worship
• temporary buildings with a planned use of 2 years or less
• stand-alone non-residential buildings with a total useful floor area under 50 square metres
• industrial and agricultural buildings with low energy demand
• buildings due to be demolished under a valid planning permission

MEES exemptions for landlords

If you cannot reach an E rating, you may qualify for a MEES exemption:

• You do not have to install an improvement that fails a simple 7-year payback test, where its cost is more than the energy savings expected over 7 years.
• You can register an exemption where cavity, external or internal wall insulation would harm the structure or fabric of the building.
• You can register an exemption where you cannot get third-party consent for improvements, such as planning permission, superior landlord consent or tenant consent.
• You can register an exemption where an independent surveyor confirms improvements would reduce the property's market value by more than 5%.
• If you have just become the landlord, you have 6 months to comply.

All MEES exemptions must be registered on the PRS Exemptions Register before you can lawfully let the property below E. Exemptions are valid for 5 years and must be renewed if you continue to let the property.

Display Energy Certificates (DECs)

Public buildings have an additional obligation. If your building is occupied by a public authority and has a total useful floor area over 250 square metres, you must display a Display Energy Certificate (DEC) in a prominent location visible to the public.

For buildings over 1,000 square metres, the DEC is valid for 1 year and must be renewed annually. For buildings between 250 and 1,000 square metres, it is valid for 10 years. Either way, you also need an advisory report, which is valid for 7 years.

DECs differ from EPCs. An EPC rates the building's theoretical energy performance based on its construction. A DEC rates the building's actual energy consumption based on metered data. A building can have a good EPC rating but a poor DEC rating if it is operated inefficiently.

How to improve your EPC rating

If your building has a poor EPC rating, the most cost-effective improvements typically include:

• replacing fluorescent tubes with LED lighting, which can improve your rating significantly at modest cost
• adding or upgrading heating controls, thermostatic radiator valves and building management systems
• loft insulation, cavity wall insulation or draught-proofing, which are among the most cost-effective fabric improvements
• replacing an old non-condensing boiler with a modern condensing one
• replacing single-glazed windows with double glazing

Commission an EPC assessment first to understand your current rating and which improvements will have the greatest impact.