How Do EPCs Impact the Value of Commercial Property?

EPCs can help highlight inexpensive ways to improve ratings, which in turn make your property more appealing to the marketplace.

A commercial Energy Performance Certificate (EPC) isn’t simply about meeting governmental guidelines or adhering to the law. It’s also about the value and marketability of your property.

UK legislation says that every commercial property offered for sale or lease must have commissioned an EPC either before they go on the market, or within seven days of that date. The certification process must be completed within 21 days, or building owners face a fine.

Getting started

First, as a general rule, you only need an EPC if:

  • You’re renting or selling your commercial property
  • You’ve finished construction on a new commercial property
  • You’ve made changes to your commercial property that involve providing or extending fixed heating, air conditioning or mechanical ventilation systems

There are exemptions to the EPC process, so make sure you’re familiar with them, too. You can find out more from the UK Government or Scottish Government websites.

Increasing value

Generally speaking, the better your EPC rating, the better the impact on the value or marketability of your property. Tenants and buyers are understandably more attracted to properties where they’re less likely to need to carry out extensive alterations.

So, the EPC process can help highlight relatively inexpensive ways to improve ratings, which in turn make your property more appealing to the marketplace.

How it works

The certificate rates commercial properties from A to G, with A being the highest rating. That tells the new owner or occupier the likely cost of lighting, heating and maintaining the building.

The better the rating, the lower that cost is likely to be.

So, there’s an immediate indication of how your EPC results might affect property value — or, at least, its marketability.

Buyers or leasers of commercial property are more likely to favour an option that promises low running costs. They’ll also consider how likely it is that they’ll have to spend to improve energy efficiency in the future.

Once your EPC results are assessed, they’ll remain valid for ten years. If within that time, you carry out significant improvements to your property’s energy efficiency, you’ll need to commission another assessment to reflect the changes you’ve made.

Other benefits

Even if your property isn’t on the market right now, or you’re not looking to create new leases, you can invest in its future value by acting on the recommendations included within the EPC.

Small changes, like improved draught proofing and insulation, might make a bigger difference than you’d imagine.

And you may not have to pay for it all yourself. Your EPC results can affect your eligibility for government energy grants and loans, as well as Green Deal finance. So, you could qualify for help with the cost of heating and insulation, draught proofing and double glazing, energy-efficient lighting and renewable energy resources.

Commissioning an Energy Performance Certificate (EPC) survey needn’t be an expensive or complicated business — they start from around £30.

Failing to provide an EPC

If you need an EPC for your commercial property and you don’t provide one, you’re looking at a fine of anything from £500 – £5,000. The penalty is usually worked out at 12.5% of the rateable value of your property, so the higher that value, the higher the fine.

Protect yourself

Your EPC assessor needs to be accredited by a Government-approved organisation or association through the EPC register or Scottish EPC register. They’ll be able to guide you through the various requirements needed to get the assessment completed and give you a good idea of timescale and cost.

It’s usually worth talking with an assessor about the level of service they’ll provide. If they stick solely to the recommendations made by the software, the improvement measures they suggest might run into tens of thousands of pounds. If they’re prepared to work with you and make their own EPC-compliant recommendations, that cost could be substantially reduced.

It may cost a little more to find an assessor prepared to work with you, rather than relying on software. But it can be well worth the investment.  

If you own a commercial property in Scotland that is more than 1,000sqm in size, ensuring your property is energy efficient is particularly important. Since Section 63 of the Climate Change (Scotland) Act 2009 — The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016, now requires you to take remedial action to improve energy efficiency.

Having the EPC in place, finding the right adviser and taking some of the measures prescribed are all excellent ways to protect your business against unnecessary fines, over-inflated costs and falling value. It’s a simple process that doesn’t even impact particularly on your time. So, it’s well worth investing in getting it right.

Raj Chall

About the author

Raj Chall is a commercial energy assessor and Section 63 adviser with Scottish Energy Services. Based in Glasgow, the company works with domestic and commercial clients across Scotland.

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