Failure to acquire an Energy Performance Certificate or to deal with asbestos in a building can have significant cost implications for the sellers of commercial properties.
Energy Performance Certificates (EPCs) and Asbestos Reports are required on practically every transaction that we deal with in Commercial Property. They are principally at the cost of the landlord or seller and are both legal requirements for different reasons. As our knowledge of energy efficiency and dangerous substances has grown over time, so has the legislation to require such information to be shared with prospective occupants and buyers.
Energy Performance Certificates (EPCs)
An EPC is needed whenever a property is built, sold or rented. It contains information about a property’s energy use, plus a recommendation report containing advice about how to reduce energy use. It rates the property in terms of energy efficiency from A (most efficient) to G (least efficient) and is valid for ten years. An accredited assessor will carry out the report and survey and produce the certificate.
However, not all buildings need an EPC so some expense can be saved. The most common exceptions are:
- stand-alone buildings with total useful floor space of less than 50 square metres
- those without any sources of heating
- places of worship
- temporary buildings (for less than two years’ use)
- industrial sites
- workshops and non-residential agricultural buildings (with very low energy use)
- some buildings that are due to be demolished
- holiday accommodation (rented out for less than four months a year or let under a licence to occupy)
- listed buildings (however, you should get advice from your local authority conservation officer if the work would alter the building’s character)
- residential buildings intended to be used less than four months a year.
The penalty for failure to produce an EPC in respect of commercial property when required is 12.5 per cent of rateable value, with a minimum penalty of £500 up to a maximum of £5,000.
Asbestos regulations for Commercial Property
Whilst the use of asbestos in new buildings was outlawed in the 1990s, huge amounts remain in existing buildings and will do for decades to come. We regularly come across reports of asbestos in buildings that clients are buying or renting.
The purpose of the reporting regime is to identify the location of any asbestos, type and risk in order to be able to manage it safely. For the most part, there is little risk if the asbestos area is not disturbed, for example if it is a ceiling covering. However at the other end of the scale, if loose fibres of asbestos are detected, for example in damaged pipe lagging, then the property can be sealed off immediately and the Health and Safety Executive informed whilst the site is required to be fully cleaned by approved contractors.
As a rule, the occupier is responsible for the management of asbestos and this effectively means procuring and paying for the report and acting on its findings. As a minimum, there is the cost of the survey and report before any recommended works. This is why when we act for buyers and tenants we seek such reports from the seller and landlord as at that point, prior to sale or letting, they are responsible and should have carried out the report and any remedial works.
Failing to have a plan to deal with asbestos and put it into action could result in a fine of up to £20,000 or imprisonment for up to 12 months. For a serious breach, there can be an unlimited fine and/or imprisonment of up to two years. Accredited surveyors and associated test laboratories can be found through the United Kingdom Accreditation Service (UKAS).
Once an external accredited surveyor has carried out an asbestos survey which reveals the presence of asbestos, you should carry out a health and safety risk assessment, sharing such information with anyone likely to come into contact with the substance, such as employees or builders.
Author: Heather Roberts
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to McCormicks Solicitors directly.
Published on 9th September 2015
(Last updated 28th March 2018)