On the 6th April the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2011 (a bit of a mouthful) will go live. And these latest Regulations will have a significant impact on the commissioning of Energy Performance Certificates (EPCs).
Sellers, landlords, and all agents (both residential, and for the first time, commercial property agents), need to be aware of the changes. Fines of up to £5000 could be levied against those who fail to implement the new rules.
The 2011 Regulations (and that is confusing enough, since they are due to commence in 2012) amend the existing legislation in three ways:
- EPCs will be mandatory on marketing of non-domestic properties , for rent or for sale, as well as on residential properties
- written property particulars must include a copy of the first page of the EPC – it will no longer be permitted to include only the asset rating
- and air conditioning reports must be registered on the central EPC register
The current rules say that a residential property seller must ensure that an EPC is either available or has been commissioned before the property is put on the market (If you are interested this is Regulation 5A (2) of the 2007 Regulations). But there is also a complementary duty on the agent to be satisfied that an EPC exists or has been commissioned, before they start marketing the property on the seller’s behalf – Regulation 5A (3).
Where marketing starts and an EPC is not available, then there is a duty on both the seller/landlord and their agent to use ‘all reasonable efforts’ to secure an EPC within 28 days of the day the property is first put on the market (Regulation 5A (4)).
The 2011 Regulations amend the existing legislation by removing the reference to ‘residential property’. The consequence of removing these words is that the requirement to have commissioned an EPC at the marketing stage is extended to commercial properties and all rental transactions.
The period during which all reasonable efforts must be made to secure an EPC will also be reduced, from 28 to 7 days. If an EPC is not obtained within 7 days, the seller and person acting on the seller’s behalf have a further 21 days to secure an EPC, after which the defence of using all reasonable efforts will no longer be available (Regulation 5A (4A).
So far so good, but to my mind, this next bit is the best. The new regulations will require that the first page of the EPC must be ‘attached to the particulars’ – it will no longer be an option for Residential Agents to simply include the A-G graph instead of the EPC. This rule will apply to all properties; residential or commercial whether for rent or for sale.
At the time of writing, and cynics would say “true to form”, there is limited guidance available on the new Regulations, we understand that ’attaching’ means physically attached – in case of a hard copy brochure – by stapling, glueing, taping etc. and it will not be acceptable to insert the EPC loose into a brochure, all of which conjures up a rather nice image of estate agents frantically sticking EPCs into brochures with a Pritt Stick!
We also understand, as do the legal firm Shoosmiths, that the requirement to include the first page of the EPC also extends to web brochures, as well as hard copies. But there does remain some confusion as to how much of the EPC will be displayed on the residential property portals. We believe that Rightmove has recently written to all its agency clients advising them that, in their opinion, Rightmove is a property advertising website and that the information displayed on the site by member agents “takes the form of property adverts and not property particulars”. Therefore, they say, in their view the new regulations do not place any additional obligations on Rightmove. Helpfully they suggest that agents “may wish to consider separately” how the new regulations might affect their own company website. The Property and Energy Professionals Association (PEPA) has asked DCLG for guidance on this statement by Rightmove, but at the time of writing nothing has been received.
However, Rightmove does have the functionality for agents who wish to display the EPC with the property information on the Rightmove listing to do so. Frankly, if I were an agent, with the risk of a £200 fine per property, I would just go ahead and do it. I wouldn’t get bogged down in the legal debate as to what Rightmove actually is. I haven’t checked the other portals, but hope that they have provided the same functionality for their users.
But this is all very good news for those of us who have been involved in the energy efficiency world for a while – this amendment will make it much more likely that potential buyers and tenants will see the recommendations attached to the EPC! If they see the EPC, perhaps then (and at last) people will start to attach some value to it. (If you were not aware, the new Regulations will also coincide with the introduction of a new look EPC for residential purposes, which will show potential cost savings and recommended improvements on the first page – the first steps towards Green Deal). The only slight disappointment is that the ‘new rules’ will not be retrospective. The changes introduced by the 2011 Regulations will only apply to properties marketed after 6 April 2012.
The slight Achilles heel in all of this, and I am probably mixing my metaphors somewhat, is the local weights and measures authority, or Trading Standards to you and me. They have always been responsible for enforcing the original Regulations in their area (Regulation 38(1) of the original regulations, if you are interested) and now their duty extends to the enforcement of the new obligations introduced by the 2011 (i.e. April 2012) Regulations. The trouble is that so far, with a few notable exceptions, Trading Standards haven’t really been engaged with the EPBD requirements. They could have been firmer with non compliant agents, but their reaction has been somewhat ‘light of touch’. We will have to wait and see what happens.
So, what are the consequences of non-compliance assuming that Trading Standards get going with this? Well first of all, as penalty charge notices can be imposed on any person who has a duty under the regulations, they extend to a seller or landlord as well those acting on their behalf. Which in turn implies that an agent who fails to inform their client of this fact could well be deemed to be negligent.
There are differing levels of penalty charge that may be imposed, depending on the type of property. For non-compliance in the case of residential dwellings, a penalty charge is limited to £200. For commercial properties, the penalty for non-compliance is determined by a sliding scale based on the rateable value, subject to a minimum penalty of £500, up to a maximum £5,000.
So, all in all, April could be an interesting month.