In today’s sustainability-driven business landscape, understanding your building’s energy efficiency is vital for both safety and cost-saving. A commercial Energy Performance Certificate (EPC) is the best way to gauge this. But what is a commercial EPC and how do you get one? Our guide provides insight here, as well as why it’s important to get an EPC for a commercial property and tips on how to prepare for the assessment. It will also cover what EPC rating your commercial property needs to be as required by law, and what to do if your building falls below this.
What is a commercial EPC?
Before diving into the preparations, it’s crucial to understand what a commercial EPC is. Essentially, it’s a document that rates a property’s energy efficiency on a scale of A (most efficient) to G (least efficient). The assessment not only provides a rating but also suggests measures to enhance energy efficiency.
A commercial EPC differs from a domestic EPC primarily in its application and assessment criteria. While both certificates assess a building’s energy efficiency, a commercial EPC evaluates non-residential properties, such as offices, retail spaces, and warehouses. In contrast, a domestic EPC focuses on residential properties like houses and apartments. The methods and variables used in the assessments also differ, given the unique energy demands and uses in commercial versus residential settings.
Why is an EPC important for a commercial property?
Property valuation provides a transparent and accurate estimation of a commercial property’s worth. By ascertaining its value, owners can gauge rental income or sale price. Lenders can determine loan amounts, and potential buyers can make informed decisions. But aside from the property’s size, location, and amenities, an often overlooked determinant of its value is its energy efficiency, primarily represented by its EPC rating.
Here are some of the reasons why an EPC is important for commercial properties.
Legal compliance
It’s mandatory for commercial properties being sold or rented out to have a valid EPC. Neglecting this can lead to legal complications and financial penalties.
Furthermore, as global efforts to combat climate change intensify, regulations around energy efficiency are becoming stricter. Having a current EPC ensures that your property is compliant with the latest requirements, protecting you from sudden legal changes.
Cost savings
Understanding and rectifying energy inefficiencies can lead to immediate reductions in utility bills, giving businesses significant financial benefits in the short term.
With a commercial EPC, investing in energy-efficient solutions, as recommended by the EPC, can result in long-term savings. As energy prices continue to rise, the return on these investments can become even more substantial.
Environmental responsibility
As businesses are increasingly under scrutiny for their environmental impact, an EPC serves as evidence of a company’s commitment to sustainability. This can be a cornerstone of a company’s CSR initiatives, enhancing its reputation.
By following EPC recommendations, businesses can significantly reduce their carbon footprint. This means a tangible, quantifiable positive impact on the environment, aligning businesses with global sustainability goals. Moreover, having a good EPC rating can be beneficial in attracting stakeholders and investors.
Benefits to the business
Commercial properties with higher EPC ratings often command higher market values and rental rates. Energy-efficient properties are seen as modern, future-proofed assets.
As we move towards a more eco-conscious future, businesses might face challenges like carbon taxes or stricter energy regulations. Being prepared with a high EPC rating ensures businesses are well-placed to adapt to these challenges without significant disruptions.
What is the EPC requirement for commercial property?
As of April 1st 2023, a commercial property must have a minimum rating of ‘E’.
An EPC rating essentially provides a snapshot of a property’s energy efficiency. Ratings range from A (most efficient) to G (least efficient). A higher rating not only ensures lower energy bills but also positions the property as eco-friendly, increasingly a significant factor in determining commercial property value. You can find out more about what makes a good EPC rating.
Can an EPC affect the value of a commercial property?
Several factors influence a commercial property’s value. The location remains paramount; a property in a thriving business district will inevitably command a higher price. Modern amenities, architectural significance, and adaptability to technological advancements can also boost value.
Typically, commercial properties are evaluated based on their potential income (income capitalisation value), the cost to rebuild or replace them (cost approach), and comparisons with recent sales of similar properties (sales comparison approach). Among these, the income capitalisation value is often considered the most relevant, especially for properties like offices or retail spaces where rental income is a primary consideration.
However, as environmental concerns take centre stage globally, energy efficiency becomes increasingly consequential. A property with a superior EPC rating tends to have greater appeal to potential buyers or tenants keen on sustainability and lower operational costs. Therefore, a good EPC can command higher rents, contributing to an increased income capitalisation value.
5 steps on how to prepare for a commercial EPC
1. Collate all building data
Before your assessment, gather all relevant data about your building. This includes floor plans, construction materials used, the year of construction, and any recent modifications. Having this information readily available can expedite the assessment process.
2. Ensure accessibility
EPC assessors will need to inspect various parts of the property. This includes boiler and heating systems, cooling systems, and lighting and controls. Ensure that all systems are easy for the energy assessor to access, and if possible, have maintenance records on hand.
The type and efficiency of your lighting play a significant role in your EPC rating. Ensure all lights are working and that any control systems, like motion sensors or timers, are accessible.
Here’s a handy list of the areas to make sure are easy-to-reach:
The rear of the property: The assessor will need to examine the rear of the building to assess its overall energy efficiency and identify any potential areas for improvement.
The boiler/boiler room: Access to the boiler or boiler room is essential for evaluating the heating system’s efficiency and determining its impact on the building’s energy performance.
Hot water system: The hot water system’s inspection is crucial to understanding its energy consumption and optimising its efficiency for better EPC ratings.
The majority of the rooms: Access to most rooms within the property is required to assess their lighting, heating, insulation, and overall energy usage.
Furthermore, in order to facilitate an accurate assessment, we recommend the following preparations:
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- Insulation visibility: If the walls or roofs have been insulated but the insulation is now concealed by panels, we kindly request that you consider removing some of the panels temporarily to allow the assessor to photograph the insulation. Please note that if the insulation cannot be photographed, it cannot be recorded in the EPC.
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- Visible low-energy light bulbs: If the majority of the lights in the property are low-energy light bulbs but are currently concealed under coverings, we kindly request that you consider removing some of the coverings temporarily. This will enable the assessor to take photographs and consider these energy-efficient lighting features in the EPC assessment.
3. Address any known issues
If you’re already aware of specific energy inefficiencies in your building, address them before the assessment. This could mean sealing drafty windows, upgrading to energy-efficient lighting, or servicing your HVAC system.
If this isn’t your first EPC, then make sure the previous findings are addressed too as they’ll likely be looked at during this new assessment.
4. Consider a pre-assessment
If you’re aiming for a higher rating or if it’s your first time undergoing an EPC assessment, consider hiring an expert for a pre-assessment. This can help identify potential areas of concern and provide guidance on improvements.
If your commercial property is new, or you’re in the process of buying it, a Chartered Surveyor conducting a RICS survey can be helpful in determining any issues with the building that may impact its energy efficiency too.
5. Understand the recommendations
Post-assessment, your EPC will come with recommendations to boost energy efficiency. While these aren’t always mandatory, they offer a roadmap for future improvements. It’s a good idea to familiarise yourself with these suggestions, as they can guide future renovation or maintenance plans.
The goal of a commercial EPC assessment is to provide you with a comprehensive and accurate EPC report that reflects the true energy efficiency of your commercial building. Should you have any questions or require further information, please do not hesitate to contact CJ Bloor for advice.
How to choose a commercial EPC Assessor
Obtaining an accurate EPC requires expertise. The assessor must thoroughly understand the property’s intricacies and the nuances of energy performance. An experienced EPC assessor not only provides a precise rating but also offers actionable insights into improving energy efficiency. Selecting the right professional for this task can make a significant difference. Discover how to find an EPC assessor with the right experience.
What to do if your EPC rating is below the legal requirements
If your Energy Performance Certificate (EPC) rating falls below the mandated legal standards, it’s imperative to take corrective action promptly. Here are steps and considerations to guide you in the right direction:
Expert consultation
The first step is to consult an accredited energy assessor. They can offer a comprehensive breakdown of the current inefficiencies and suggest improvements specific to your property.
Prioritise recommendations
The EPC report usually comes with a list of suggested improvements. Prioritise these based on the potential impact on energy efficiency and the associated costs.
Implement changes
Start with quick wins – those changes that are more affordable and can make a notable difference in a short time. Examples could include sealing gaps in doors and windows or upgrading to energy-efficient lighting.
Invest in renewable energy
For a longer-term solution, consider integrating renewable energy sources, such as solar panels or wind turbines, depending on the feasibility for your property type and location.
Regular maintenance
Ensure regular maintenance of heating, cooling, and ventilation systems. Dirty filters or malfunctioning equipment can severely hamper energy efficiency.
Review and update insulation
Proper insulation can dramatically reduce energy costs. Check the insulation in roofs, walls, and floors and upgrade where necessary.
Reassessment
After implementing the suggested changes, it’s advisable to have your property reassessed. This not only ensures compliance but can also lead to savings on energy bills.
Stay informed
Energy standards and regulations can evolve over time. Stay updated on local regulations to ensure continued compliance.
Addressing a subpar EPC rating not only ensures legal compliance but also results in reduced energy bills, a more sustainable property, and enhanced value for potential buyers or tenants. Remember, the upfront investment in improvements can lead to significant long-term savings.
How else can I increase the value of my commercial building?
Boosting the value of a commercial property is often about strategic upgrades. Consider implementing energy-efficient solutions such as LED lighting, high-performance insulation, and energy-efficient HVAC systems. Such upgrades can substantially improve the property’s EPC rating.
Additionally, familiarise yourself with EPC conventions. They can provide guidance on meeting energy benchmarks. Understand the importance of applying the correct EPC conventions here.
In conclusion, while traditional factors like location and amenities continue to play a significant role in determining commercial property value, the importance of energy efficiency, as represented by the EPC, cannot be underestimated. As the world moves towards greener solutions, properties that align with this ethos will invariably stand out and command higher values.
