Property management

Understanding EPC Regulations for Commercial and Residential Properties

August 29, 2023

Complying with the UK Governments’ EPC Rating requirements is at the forefront of the minds of landlords, tenants and managing agents. EPC ratings are defining a buildings future to bring energy efficiency into sharp focus.

Daniel Major, Property Management Associate at Metrus, explains the background on Energy Performance Certificates and how owning or occupying an energy efficient building has significant benefits.

What is an Energy Performance Certificate?

An Energy Performance Certificate (EPC) is an official document which assesses and rates the energy efficiency of a property on a scale from A to G, with A being the most efficient. EPC ratings provide valuable information about a property’s energy consumption, carbon emissions and potential for improvement. The assessments consider factors such as insulation, heating systems, lighting and renewable energy sources.

It is a legal obligation for commercial and residential properties to possess a valid EPC when being constructed, sold or leased. These regulations aim to accelerate the overall energy efficiency of buildings in the country for the benefit of the landlords and occupiers, as well as the environment.

In 2018, the UK Government introduced the Minimum Energy Efficiency Standards (MEES) regulations which state all commercial and residential properties in England and Wales must have an EPC rating of at least E, with plans for buildings to have a C rating by 2027 and B rating by 2030.

The Benefits of Energy Efficient Buildings

There are significant benefits to improving the energy efficiency of a building and achieving a high level EPC rating. This can considerably contribute to increasing the value and desirability of a commercial, residential or mixed use property. In fact, a growing number of landlords and tenants are increasingly seeking environmentally responsible places to own and occupy; they are prioritising energy efficient properties as they realise the long-term savings on utility bills and the reduced environmental impacts they offer. This can be done by upgrading insulation, installing energy-efficient lighting, optimising heating and cooling systems, and incorporating renewable energy sources can lead to reduced energy consumption and lower utility bills.

Data gathering and ESG reporting on a building’s carbon emissions is important and both Landlords and Tenants want to be in a position to share the evidence with various stakeholders. For example at one of our managed properties, we have a number of solar panels installed where remote monitoring of the system allows us to report on real time data to the landlord and tenant showing the environmental benefits of the system. According to the live data over the past 3 months, Metrus has demonstrated that the solar panels at this site have saved over 1,000 kg of CO2 emissions which is the equivalent of 62 trees planted. “The proof is in the pudding” and we as property managers can be in an advantageous position to report on the data in order to show a building’s reduced environmental impact for our landlord and tenant clients.

How are Metrus, London’s leading property advisors, have been working closely with their clients?

As London’s leading property management advisors, the team at Metrus recognise the critical role of EPC ratings in commercial and mixed-use properties
We are taking a collaborative approach across our managed portfolio with our clients and specialist consultant partners where we are managing strategies to mitigate risks of ratings falling into the danger zone.

Properties can present unique challenges in order to comply with the MEES regulations due to their size, age and mixed-use occupiers and over the course of a building’s life cycle, certain mechanical and electrical plant will need replacing due to various circumstances. When taking decisions with our clients to replace such plant, we are actively aligning these plans with ensuring that the EPC ratings are maintained or enhanced and not adversely affected.

Being objective is important as well when working on plans that will help reduce a building’s carbon emission especially when landlords will be assessing the value implications to the assets they own and tenants maybe trying to reduce business costs but wanting to be in an energy efficient building.

Part of our role is also receiving applications for consents from tenants that have aspirations to complete alteration works or fitout a commercial space at the beginning or over the term of lease. It’s really important that the proposed works do not affect the EPC rating and we are ensuring that these proposals are checked with the support of our specialist partners before works are approved.