Energy Performance Certificate EPC

Are you up to speed on the pending EPC regulations and Enhanced Capital Allowances scheme, which potentially enables you to write off 100% of the cost of your business lighting?

Dan Wallis, Associate Director at 3SIXTY highlights how two government policies can be utilised…

From April 2018, a new legal standard for minimum energy efficiency will be brought into force for leased commercial and residential properties under the Energy Efficiency Regulations 2015.

The minimum energy efficiency standard (MEES) will make it unlawful for landlords to renew existing tenancies or grant new tenancies if the building has an EPC rating lower than an E. 

At this juncture, landlords can either seek exemption from the act or improve the energy performance of their building.  From 2023 the act will apply to all leases new or existing, meaning retrospective improvement will be needed.

In light of these new regulations we would advise landlords to be proactive and start taking action now in order to mitigate cost and the potential for void periods.  First and foremost we recommend checking the age and accuracy of any existing EPC’s, as your existing stock could potentially be unlettable under the act. 

We would recommend the use of any void periods to complete upgrade works as this will be the more cost effective and simpler option whilst also being able to assist any ongoing marketing – therefore the right advice and input in specification could actually assist in securing stronger rent as a “payback”.  It is also worth bearing in mind that the cost of specialist equipment and labour linked to such upgrade works may rise sharply next year due to supply vs demand and/or manufacturers taking advantage of demand/changes in legislation supporting their products by adding premiums.

Our advice would be to future proof your building/s, not just reach the minimum pass, as the pass rate of E is predicted to be raised in the future by the government, with the aim of removing the lowest performing properties from the stock list.

At 3SIXTY, we can view the risks present with existing properties or portfolios by assessing the current EPC ratings and can advise on the best remedial actions to ensure compliance and manage improvement works on site.

We can work with client’s legal representatives to ensure all compliance is covered within leases and practical mechanisms are installed as well as managing the works on site.

In addition to helping current or future owners of property we can assist vendors by ensuring that all EPC targets are met and fully documented to avoid negative negotiation by purchasers.

Enhanced Capital Allowances explained – did you know you could upgrade your business lighting tax-free?

Enhanced Capital Allowances (ECAs) are a straightforward way for a business to improve its cash flow through accelerated tax relief. The scheme encourages businesses to invest in energy-saving equipment as set out in the Energy Technology List (ETL), which is managed by the Carbon Trust on behalf of Government to help reduce carbon emissions.

The ECA scheme provides businesses with 100% first year tax relief on their qualifying capital expenditure. The scheme allows businesses to ‘offset’ the whole cost of the equipment against taxable profits within the first year of purchase.

In light of the impending changes to EPC regulations now would be a good time for landlords to consider investing in energy saving equipment which qualifies under the scheme.

3SIXTY would recommend early consultation with your accountants at the feasibility stage of a project, to ensure the maximum tax allowances can be gained on a project involving energy improvements works.

If you would like more information about this please contact either Dan Wallis, Associate - 0117 247 0120 or dwallis@3SIXTYrealestate.co.uk.

3SIXTY Real Estate is a specialist commercial practice of Architects, Building Surveyors and Property Management with offices in Bristol,