Commercial landlords in the hot seat?

Landlords who don’t comply with the regulations, will risk paying penalties and have their non-compliance published.

Penalties range from:

  • less than 3 months breach: 10 per cent of the property’s rateable value, subject to a minimum penalty of £5,000 and a maximum of £50,000; or
  • over 3 months breach: 20 per cent of the rateable value, subject to a minimum penalty of £10,000 and a maximum of £150,000.

Affected landlords will either need to register for an exemption or upgrade non-compliant buildings.

Landlords need to be aware of the current condition and renewal date for their tenant’s lease. Tenants could use the EPC rating of a building as a valuable negotiation tool at the renewal stage. No landlord wants to risk having an empty property.

Landlords and tenants of commercial properties can check their building’s EPC rating on the EPC Register here.

Other implications on landlords

  • Non-compliant properties will not be able to be rented without risk of penalties and publication of non-compliance.
  • Valuations of properties will be affected.
  • There will be a cash flow impact of having to upgrade non-compliant properties.
  • Occupiers will now have more bargaining power on the standard of buildings during lease negotiations.
  • There may be an impact on rent reviews, dilapidation assessments and the provision of finance from lenders.