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The EPC regulations have been changed today. The changes firmly point towards the Government trying to meet the bare minimum necessary under the EPBD Regulations rather than sincerely attempt to reduce carbon and energy waste.

Links to all relevant documents can be found at the end of this article.

The main changes are as follows:

  • The marketing particulars of agents need only include a statement of the EPC rating if space does not allow for an EPC graph.
  • All commercial property regularly visited by the public of 500sqm and over must publicly display their EPC if they have one. This includes, for example, retail units, leisure centres, theatres, cinemas. Indeed any commercial property where members of the public have a licence to enter. There is no requirement to acquire an EPC if one is not currently available.
  • Additionally, buildings of special architectural or historic merit, are now exempt from the EPC regulations, in so far as compliance would unacceptably alter their character or appearance. This is largely held to mean listed buildings.
  • Display Energy Certificates are now required for all public buildings of 500sqm and above. These are valid for 10 years for those public buildings of 500-1,000 sqm.

Many of these changes have been met with dismay by both the energy and the building industries. This week sees the launch of the Green for Growth campaign by Building Magazine. This is backed by both the CBI and UKGBC. Amongst other things they call for a more comprehensive roll out of Display Energy Certificates and an acknowledgment that energy efficiency policies are essential, not just for the construction industry, but the economy as a whole. The government’s policies have also been heavily criticised by Paul Morrell, the government’s previous chief construction adviser.

The original Government documents can be downloaded from the Government portal here.

For general background information on the commercial EPC, please see here.

Amongst other things the Energy Act 2011 has set a date for, what will amount to, one of the biggest shake-ups in the property world for many years. If you thought EPCs were a headache, then this is a migraine!

From no later than 6th April 2018, possibly sooner; it will become impossible to let a property below an EPC rating of ‘E’. This will be true for domestic as well as non-domestic properties. It is currently restricted to lettings only not sales.

For a landlord to continue to let a badly performing property he has two choices; firstly pay for any improvements privately, either himself or through raising finance; or secondly through the Green Deal – the Government’s flagship energy policy, recently soft-launched.

Although the regulations that will add the meat to the bones of the Act have yet to be decided, these will be brought in by 1st April 2016. Likely regulations include:

  • landlords who occupy their own building under a lease to be caught by the Act.
  • the ability of domestic tenants to force a landlord to make reasonable energy efficiency improvements – if the property is caught by the Act.
  • Social Housing may be exempt from the Act.

The Green Deal is a method by which households and businesses can reduce their energy consumption without paying for it up front. The improvements must meet the Golden Rule, ie any works must bring in a greater saving than the small increase on the utility bill. The Deal will stay with the property and transfer to any new owner of the property.

As can be seen the assessment tool for both the initial rating and that used by the Green Deal (to ascertain which improvements to make to the property) is the Energy Performance Certificate. Part of the calculation that takes place within the EPC is a comparison between the modeled building and current Building Regulations, specifically Part L.

Between now and 2018 there will be two new amendments to Part L; which improve efficiency standards. Therefore, a property that is now rated an ‘D’ or ‘E’ or even a very low ‘C’ – could be caught under the Act come 2017-18.

Other issues and liabilities that arise from the Energy Act are:

  • Dilapidations. If a property is returned to its original shell form, the EPC rating will be badly effected, very likely making it unlettable under the Act.
  • Landlords would be liable for any business rates whilst the property undergoes refurbishment to bring it up to standard.
  • Tenants will use this Act during rent review negotiations.
  • Properties that receive a Green Deal assessment, but still fail to be rated above an ‘F’ will drastically lose market value.

It is therefore vital that landlords find a reputable professional assessor accredited with one of the larger, long-standing institutions such as CIBSE and BRE. Landlords should start looking to their assessor much as they look to their agent, conveyancer and accountant; as an integral part of their business-relationship dynamic.

A debate has recently ended in the Economist magazine that makes for interesting reading.

The question was whether subsidising renewable energy was a good thing. The cons won by 52% to 48%. This threw up a number of interesting points to me.

Firstly, I was surprised that the Economist magazine chose for the arguments of the main critic of the motion, Robert Bradley, of the IER. Robert Bradley, a former Enron executive, is a well-known global warming skeptic, insisting on a “benign enhanced greenhouse effect” (ie global warming is a good thing) and that the world economies cannot afford carbon control.

Alarming as these points are, the thing that most alarmed me, though I shouldn’t be surprised really since the president of the IER is a former oil-industry lobbyist, is the fact that initially the debate started out at 53% of those that voted, agreeing with the motion that subsiding renewable energy was a good thing. Then after Robert Bradley posted a clarion call to his American readers on his own blog about the debate – hey presto the numbers change to deny that renewable subsidy is a good thing.

There must have been a more objective speaker available – or maybe not!

The whole debate can be found here.

 

An interesting debate is under way at the Economist.

The assertion is that CCS (carbon capture and storage) cannot be relied upon for the climate control policies.

Joseph Romm speaking for the assertion believes that vast expense will glean little reward until at least 2030. Whilst the IEA estimates that approx 19% of the emission cuts needed by 2050, can be had by CCS.

This is interesting as the UK PLC has recently pulled out of the Longannet CCS scheme, citing too high a cost for too little a return.

Why not visit the Economist debate here, and follow the proceedings yourself.

 

 

The countdown has begun – with only 12 months before the Green Deal is due to go online.

But first, a short introduction for those who do not know what the Green Deal is. Essentially it’s a way of installing energy efficient systems, such as solar panels etc without having to pay for it up front. The cost of the installation will be borne by companies such as utilities firms or supermarket chains, who will in turn recoup the money, plus 6%-8% interest, via a small increase in your energy bill. The agreement is similar to a tiny mortgage in that, if you move house, or shop as the Green Deal is also for businesses, the agreement stays with the property.

Aaah, you might say, well who wants another mortgage – no matter how small?

Well, the Green Deal must satisfy the “Golden Rule” ie the expected savings must be equal to or greater than the costs involved in installing the system. Therefore it will always be better, financially, to have the system than to not. Moreover, from 2018 domestic and commercial properties that are let, must achieve an E EPC rating or above, to continue letting. So landlords – take note!

All these calculations and more will be undertaken by independent (more on that later) advisers – perhaps energy assessors who have undergone further training.

For an excellent, if a little lengthy, further explanation please see this BRE presentation on the Green Deal

But will it work as the Government hopes and provide the catalyst for energy efficiency in both the domestic and commercial sectors, and therefore reduce our carbon emissions and increase our energy security? Will it provide the £800 million shot in the arm to the economy that Ernst & Young have recently suggested? And on a personal note, will it provide much needed extra revenue for the beleaguered energy assessor community?

I think the answers are: a guarded Yes, No, and sadly No.

The first two questions can really be answered together as one affects the other. Research has found that when all costs are considered the Golden Rule will only work for the very easy carbon-cutting measures – any thing else will simply cost more in total than the expected savings – thereby failing the Golden Rule.

The other problem is with funding for hard to treat properties, which the Government says must receive extra money from energy firms (ECO) to make it work. As has been reported recently in Business Green if this extra money is deemed ‘non-discretionary spending’ (which has a ceiling, capped by the Treasury) then the money for the ECO will have to be taken from budgets put aside for other low-carbon strategies such as the Renewable Heat Incentive and the Feed In Tariff. This, of course, will contradict the Grand Plan of the ‘Greenest-Government Ever’ which is to cut carbon nationally.

There is also a problem of trying to be everything to everybody. It seems the Green Deal is not really built for commercial property and is actually far more suited to the domestic sector – its original aim. Many questions such as how will the Golden Rule  apply to commercial properties where the energy bill is part of a larger service charge, or where the energy bill is part of a complicated contract between energy supplier and end user – remain unaswered.

And finally, will the Green Deal provide extra work for the energy assessor community? Well if the previous 5 years has taught me anything, then the answer is an emphatic, No! There is the problem of training, with far too many training providers of dubious quality being allowed to operate. There is the problem of varying standards among assessors. There is the problem of the large energy companies and high supermarkets swamping the assessor market with their own trained assessors, who will really be door-to-door salesmen selling their firm’s systems. (We’ve seen how that works for the quality of advice from utility companies). Once the market is flooded with these ‘cheap’ assessors, this has the effect of dragging down the prices of truly independent advisers. Since the prices are unsustainable the end result is a drop in the quality of advice across the board, meaning the customer and ultimately UK PLC loses out.

For more information see the DECC Green Deal Summary.

 

“Dear All,

The purpose of this email is to inform you that it will not be possible to bring the amendments to the existing Energy Performance of Building Regulations 2007 into force on 1 July, but it is our intention to implement the changes as soon as possible. DCLG will be providing a further update shortly.”

 

This is the announcement from DCLG that Business Footprint has received concerning the EPC changes for this year.

PROPOSED CHANGES TO THE ENERGY PERFORMANCE OF BUILDINGS (CERTIFICATES AND INSPECTIONS) (ENGLAND AND WALES) REGULATIONS 2007 (THE EPB REGULATIONS)

1. Summary of the changes to the EPB Regulations

The changes to the EPB Regulations can be summarised as follows:

• the changes will extend the current requirements to commission an EPC that apply to residential buildings to all buildings sold or rented out;

• the requirements for the provision of an EPC with written particulars are extended to all buildings sold or rented out and the option to attach the asset rating is removed; and • the regime for lodgement of EPCs and DECs on the Register is extended to air conditioning inspection reports. The following summary details the main changes made in relation to EPCs.

2. Commissioning an EPC before marketing

A number of changes are made to regulation 5A of the EPB Regulations. In general, the onus remains on the ‘relevant person’ (i.e. the seller or landlord) to commission an EPC before marketing. The main changes are as follows:

• the duty to commission an EPC before marketing is extended to the sale and rent of residential and non-residential buildings;

• the current 28 day period within which an EPC is to be secured using ‘reasonable efforts’ is reduced to 7 days;

• if after that 7 day period the EPC has not been secured the relevant person has a further 21 days to do so.

3. Power to Require the Production of Documents

TSOs currently have the power to require the ’relevant person’ (i.e. the seller or landlord) to produce copies of the EPC for inspection and to take copies if necessary. The power to require the production of documents will be extended to include persons acting on behalf of the seller or landlord – e.g. estate agents and letting agents. This means, for example, that TSOs will be authorised to require estate agents to produce evidence showing that an EPC has been commissioned where they are marketing a building without one.

4 Clarifying when an EPC is required

This technical amendment to Regulation 5 is intended to remove the erroneous belief that the provision of the EPC can be delayed until shortly before the parties enter into a contract for sale or rent. This will be achieved by deleting the words “before entering into a contract to sell or rent the building or, if sooner” in Regulation 5(2)(b) of the EPB Regulations.

5. Consequential changes

A number of consequential changes have been made to enable TSOs to enforce the new duties.

6. EPC Information in Written Particulars

Currently, for residential sales only, the relevant person or his agent is under a duty to either attach the EPC to written particulars or include the asset rating on those particulars. The amendments to the EPB Regulations require the EPC to be attached to written particulars in relation to buildings sold or rented out. The option to include the asset rating will no longer apply.

The existing definition of ‘written particulars’ has been expanded to ensure that particulars produced for rented out buildings and commercial properties are captured by the new requirements.

7. Commencement

The changes described in paragraphs numbered 2 to 4 will have effect in relation to properties marketed after the expected coming into force date of 1st July 2011.

The change described in paragraph 6 will have effect in relation to properties marketed after of 1st October 2011.

Home Buying, Selling & Energy Performance Division DCLG 12 April 2011

 

How far ahead do you think in business terms? 20 years is probably too long for most, 10-15 years may be for the professionals among us.

But what about 3-5 years?

Surely most of us think in those terms!

Well apparently not.

The first is a graph which predicts the moment that Middle Eastern oil surplus becomes smaller than the demand for oil from the rapidly developing and expanding Asian markets.

What effect do you think this will have on the price of oil?

And since gas prices are pegged to oil prices – by extension to the price of gas?

The second image is a graph of the energy sources used today in the UK for the generation of electricity. You can see that gas occupies almost a half of the total mix.

So what do you think will be the effect on the price of electricity? On inflation?

Let me pull a few quotes for you:

Businesses which prepare and take advantage of the new energy reality will prosper…

To manage increasing energy costs and carbon exposure, businesses must reduce fossil fuel consumption…

Business must address energy-related risks…

Businesses that can adapt their activities to benefit from emerging energy trends and manage the risks will gain an advantage over their competitors.

These did not come from a Green think-tank or an environmental NGO or pressure group – these quotes came from the Lloyds 360 Risk Insight – which brings together views from the worlds leading business, academic and insurance experts.

Most commercial property owners still see commercial EPCs, DECs, Air Conditioning Inspections and almost all of the environmental regulations as an infuriating hurdle that must be jumped over as cheaply and quickly as possible.

Is it not about time they started adapting to a changing world?

www.businessfootprint.net


On Friday there was more bad news for business owners who thought that carbon reduction and energy efficiency can be ignored.

All member states are to review their public building energy efficiency standards from January 2012.

Since current research shows that as things stand, the EU member states will only achieve  a 10% improvement, the European Council will review the 2020 target by 2013, with the view to pressing for even greater efficiency than currently attainable, in order to guarantee the 2020 20% efficiency target.

As Business Footprint has been saying for a long while now, those occupying commercial property or with commercial property investments need to think about this NOW if they wish to reduce their risk.

We provide bespoke recommendations from a range of services, such as Commercial EPCs, energy audits, FITs and grants advice, and air conditioning inspections which, if implemented will not only drastically cut Utility costs now, but will help shore up property investments for the future.

www.businessfootprint.net

Recently the Carbon Trust released a particularly damning series of reports.

Firstly, it has found that big business has undervalued energy efficiency investments to the tune of £1.6bn. This was after 1000 investments between 2006 and 2009. They cite such reasons as the Landlord-Tenant divide and the low priority given to energy. We think that a lot of this activity goes hand-in-hand with undervaluing the RISKS involved in doing nothing.

The second report showed how the public sector could save £1bn through energy efficiency measures.

The third report revealed UK PLC to be lagging behind Europe, Germany in particular, in the attempts to generate new business opportunities from energy efficiency and sustainability. With the rise of new markets in Asia, Africa and South America – all of whom will have the same energy problems as us (if they are not having those problems already) this seems like the perfect opportunity for the UK to play a role in an industry that will be of global importance.