Energy Performance Certificates (EPCs)
An Energy Performance Certificate (EPC) looks broadly similar to the energy labels provided with vehicles and many household appliances. Its purpose is to indicate how energy efficient a building is. The certificate will provide an energy rating of the building from A to G, where A is very efficient and G is the least efficient. The better the rating, the more energy efficient the building is, and the lower the fuel bills are likely to be.
In the UK the energy performance of the building is shown as a non-dimensional carbon dioxide (CO2) based index i.e. it’s a simple number without any units such as kWh/sqm or similar metrics.
The energy rating of a building is a complex calculation which is based on a combination of factors. The key factors are:
- the type of construction of the building (including walls, roofs, floors and glazing);
- whether parts (zones) of the building are used for different purposes e.g. office, retail, industrial, etc. and the occupancy profile for each zone;
- heating, cooling, ventilation and hot water systems used;
- lighting and its controls.
The final CO2-based rating that a building receives depends on the energy used for space heating, water heating, ventilation, cooling and lighting, less any energy generated from energy generation technology installed in the building (such as solar water heating or photovoltaics).
The rating is adjusted for the total useful floor area of a building (typically its Gross Internal Area) so it is independent of size for a given type of building. The calculation process compares the carbon emissions of the building with those of a reference building. The reference building is an equivalent building (i.e. a building of the same size, shape and use as the actual building) constructed to a notional building designed to a specified standard.
As each energy rating is based on the characteristics of the building fabric and the building services, this type of rating is also known as an “asset” rating, opposed to an “operational” rating based on actual energy bills (e.g. the “Display Energy Certificates”).
Each EPC comes with a recommendation report, which provides energy and carbon saving suggestions on using the building more effectively, cost-effective improvements and other more expensive measures which could enhance the building’s energy performance.
The EPC will not provide comments on the safety aspects or maintenance of the building services, nor will the assessment confirm that the installed system is fit for purpose.
In addition to the asset rating, the EPCs must convey several other key pieces of information, such as:
- reference information – this includes the unique certificate report reference number (generated when the certificate is lodged on the central EPC register), the address of the building and the date of issue of the certificate;
- energy assessor details – this includes the name of the accredited energy assessor, the name and address of the assessor’s employer or the name under which the assessor trades (if self employed) and the name of the approved accreditation scheme of which the energy assessor is a member;
- a recommendations report.
Once a qualified Energy Assessor has been commissioned to produce an EPC, there are three main steps to performing the assessment. These are:
- gathering the relevant information about the building;
- analysing the information and identifying different zones of the building;
- entering the information into an approved software programme. For example, for commercial buildings, the appropriate methods are Simplified Building Energy Model (SBEM) or Dynamic Simulation Model (DSM).
The Energy Assessor will need to understand the internal layout of the building and for what purposes it is designed to be used. This is to understand the energy demands of each individual space (zone) in accordance with its designed use. The information that will be required to produce an EPC includes:
- analysing the information and identifying different zones of the building and their dimensions
(either as verified from plans or as measured);
- the activities conducted within the zones, e.g. retail space, office space, kitchens, storage, etc.;
- the heating and ventilation services for each zone, including type of system, metering, controls, fuel used, etc.;
- the lighting and controls used for each zone;
- the construction of the fabric of the building and thermal efficiency of the materials used e.g. roof, floors, walls and glazing.
If there are no plans for a building, the Energy Assessor will need to survey the building and gather the appropriate information. If you have up to date information and plans for your building this process will be less time consuming. The Energy Assessor is responsible for ensuring the information used in the energy calculations is accurate and, even where detailed plans are available for existing buildings, must validate this information by making a site inspection. The Energy Assessor also needs to validate (via plans and or a physical survey) zone distances, thermal insulation and building services.
This information will be fed into an approved software programme using a government-approved energy assessment method. The software produces the certificate and the recommendation report for the building. Only government-approved software may be used to assess the energy performance of a building and to produce the EPC.
The software assesses the energy demands of each individual space in the building in accordance with the activity conducted within that space (e.g. office space, kitchens, storage space, etc.). Different activities can result in different periods of occupancy and different required temperatures, as well as varying requirements for lighting and hot water supply. The energy consumption and carbon dioxide emissions are calculated by considering these demands in relation to the details of the building services.
The software will use the information provided by the Energy Assessor and standard performance tables and will produce the EPC and recommendation report, which will help owners and occupiers to improve the energy efficiency of a building. For each recommendation indicative paybacks are noted. The recommendations are provided in four categories: short term payback (less than three years), medium term payback (between three and seven years), long term payback (greater than seven years), other recommendations (based on the energy assessor’s knowledge).
Once the energy assessor has produced the EPC it must be lodged on the central register. Lodging the certificate will generate a certificate report reference number which all valid EPCs must contain. The EPC must also be provided to the person who has commissioned the EPC at this stage.
Energy assessors must act in an independent manner and for ensuring the EPC is lodged on the central EPC register. Accreditation schemes must make adequate provision to ensure that the energy assessment is carried out in an independent manner. Energy assessors must declare whether there is a conflict of interest in them undertaking an assessment. Conflicts of interest include, but are not limited to, a situation where the energy assessor has employment links with the organisation or is related to the person who commissioned the EPC. Energy assessors must identify conflicts of interest and raise concerns with their accreditation scheme if they feel they have been asked to implement practices which run contrary to this.
A team of people can work on gathering the information for an energy assessment as long as they are working under the direction of an accredited energy assessor. Accreditation schemes are responsible for managing energy assessors and for monitoring the quality of the EPCs by ensuring their energy assessors are competent and possess the appropriate skills to conduct energy assessments. Energy assessors will need to be qualified for the type of building being assessed. To become a member of an accreditation scheme the Energy Assessor must:
- demonstrate their competence, either by having a recognised qualification from an awarding body or approved prior experience and learning equivalent to the national occupational standard requirements;
- maintain appropriate professional indemnity cover;
- update their skills and knowledge regularly;
- participate in the accreditation scheme quality assurance procedures;
- abide by the accredited scheme advice and guidance.
An EPC is intended to inform potential buyers or tenants about the energy performance of a building, so they can consider energy efficiency as part of their investment or business decision to buy or occupy that building.
An EPC is only required when a building is constructed, sold or rented out. For the purposes of the regulations, a building is defined as
“a roofed construction having walls, for which energy is used to condition the indoor climate, and a reference to a building includes a reference to part of a building which has been designed or altered to be used separately”. For a building to fall within the requirement for an EPC it must have a roof and walls and use energy to condition the indoor climate. Services considered to condition the indoor climate are the following fixed services:
- mechanical ventilation;
Although the provision of hot water is a fixed building service, it does not condition the indoor environment and would not, therefore, be a trigger for an EPC. The same argument applies to electric lighting.
Where a building is expected to have heating, mechanical ventilation or air conditioning installed, it will require an EPC based on the assumed fit-out in accordance with the requirements in Part L of the Building Regulations.
A building can be either the whole of a building or part of a building, where the part is designed or altered to be used separately.
A part of a building designed or altered to be used separately is where the accommodation is made or adapted for separate occupation. This could be indicated by the accommodation having its own access, separate provision of heating and ventilation or shared heating and ventilation, but with the ability by the occupier to independently control those services. For a non-dwelling the part could be deemed to be separate
even if some facilities (i.e. kitchen and toilet facilities) were shared. An example might be a unit in a shopping centre or a floor in an office building.
In general terms the EPC provided or made available should reflect the accommodation being sold or rented out.
In terms of the requirement for an EPC, buildings can have multiple tenancies, differing lease agreements, various sub-letting arrangements and different uses (e.g. mixed retail, residential and office accommodation). To determine the requirement for an EPC in a building, the following should be considered, although this is not an exhaustive list of the individual circumstances which may arise:
- use of energy to condition the indoor climate and the requirement for an EPC;
- fixed services are any part of, or any controls associated with, fixed systems for heating, mechanical ventilation or air conditioning i.e. those services attached to the fabric of the building; if there is no intention of having fixed services and no ability to include fixed services to condition the indoor climate, then an EPC will not be required;
- if a building is to be sold or rented out with fixed services, the EPC for the building should reflect the fixed services actually installed;
- if a building is to be sold or rented out without fixed services, but there is an intention that fixed services will be installed, the EPC should be based on the building’s use class under the planning legislation. This applies whether fixed services have ever been installed previously in the building, or whether the building is newly constructed on a ‘shell and core’ basis. For the purposes of producing the EPC, the activity within the building should be specified in line with business activity typical of the use class and the most energy intensive fit-out adopted in line with Part L of the Building Regulations in force when the building was built;
- energy used directly for heating or cooling a process is not taken to mean conditioning the indoor climate. Those buildings without any other conditioning would not require an EPC.
EPCs for the sale or renting out of buildings that are non-dwellings will be valid for 10 years or until a newer EPC is produced for building, if earlier. From 9th January 2013, it is a requirement for all non-dwellings over 500 sqm frequently visited by the public to display a valid EPC in a prominent place clearly visible to members of the public. This will only apply to buildings where an EPC has been produced for that building. If a building, or building unit, is subsequently sold, constructed or rented out and an EPC is produced then this must be displayed.
From 9th January 2013 all sales or lettings advertisements in the commercial media should show the EPC rating of the property being advertised. There is no requirement to display the full certificate but where there is adequate space, the advertisement should show the A-G graph. However, it is recognised that this will not always be possible. In such cases the advertisement should include the actual EPC rating of the property (for example C).
EPCs are not required on sale or rent for buildings due to be demolished, provided the seller or landlord can demonstrate that:
- the building is to be sold or rented out with vacant possession;
- the building is suitable for demolition, the resulting site is suitable for redevelopment and all relevant planning permissions, listed building consents and conservation area consents exist in relation to the demolition and they believe, on reasonable grounds, that a prospective buyer or tenant intends to demolish the building (e.g. on evidence of an application for planning permission).
The duties relating to EPCs do not apply to:
- buildings used as places of worship and for religious activities;
- temporary buildings with a planned time of use of two years or less, industrial sites, workshops and residential agricultural buildings with low energy demand and residential agricultural buildings which are in use by a sector covered by a national sectoral agreement on energy performance;
- stand-alone buildings with a total useful floor area of less than 50 sqm.
Buildings protected as part of a designated environment or because of their special architectural or historical merit are exempt from the requirements to have an energy performance certificate insofar as compliance with minimum energy performance requirements would unacceptably alter their character or appearance. To comply with minimum energy performance requirements, many of the recommendations in an EPC report e.g. double glazing, new doors and windows, external wall insulation, and external boiler flues would likely result in unacceptable alterations in the majority of historic buildings. These can include buildings protected as part of a designated environment or because of their special architectural or historical merit (e.g. listed buildings or buildings within a conservation area). In these cases building owners will need to take a view as to whether this will be the case for their buildings. If there is any doubt as to whether works would unacceptably alter the character or appearance of a building, building owners may wish to seek the advice of their local authority’s conservation officer.
It is the action of selling, renting out or construction that triggers the requirement for an EPC. Therefore, existing occupiers and tenants will not require an EPC unless they sell, assign or sublet their interest in a building on or after the dates the regulatory requirements came into force. As soon as a building is in the process of being offered for sale or rent, it is the responsibility of the seller or landlord (i.e. the relevant person) to make available free of charge an EPC to any prospective buyer or tenant. The EPC must be provided by the seller or landlord at the earliest opportunity and no later than when:
- a person requests information about the building (the time at which the relevant person makes any written information about the building available), or
- when a person makes a request to view the building, the time at which the person views the building.
The seller or landlord is responsible for ensuring there is an EPC for the building, or part of the building, being sold or let, even if an agent or another service organisation is acting on their behalf or providing an EPC. The seller or landlord must, therefore, ensure any person acting on their behalf (i.e. estate or letting agent) is complying with the regulations.
Before a building is put on the market the seller or landlord must commission an EPC for the building. A person acting on behalf of the seller or landlord must also be satisfied that an EPC has been commissioned for the building before marketing. The seller or landlord or a person acting on their behalf must use all reasonable efforts to ensure the EPC is obtained within seven days. A further 21 days is allowed if after using all reasonable efforts the EPC cannot be obtained within seven days.
When a building being constructed is physically complete, it is the responsibility of the person carrying out the construction to give an EPC and recommendation report to the building owner and to notify building control that this has been done. Building control will not issue a certificate of completion until they are satisfied this has been done.
If a building is modified to have more or fewer parts than it originally had and the modification includes the provision or extension of fixed services for heating, air conditioning or mechanical ventilation (i.e. those services that condition the indoor climate for the benefits of the occupants) then an EPC will be required. When the modifications are physically complete, it is the responsibility of the person carrying out the modification works to give an EPC and recommendation report to the building owner and to notify building control that this has been done. Building control will not issue a certificate of completion until they are satisfied this has been done.
The requirement for an EPC to be made available to a prospective buyer or tenant does not apply until construction or modification of the building (to have greater or fewer parts designed for separate occupation) has been completed.
The sale of an interest in the building must be treated as the same as the sale of the building itself and an EPC will be required for the assignment of a lease, where a leasehold interest is being passed on to another person. The sub-letting of a building would also require an EPC to be provided.
The purpose of providing an EPC during the sale or renting process is to enable potential buyers or tenants to consider the energy performance of a building as part of their investment. Not all transactions will be considered to be a sale or let to which the duties apply. These will include:
- lease renewals or extensions (please note that in most instances a new contract between the same landlord and the same tenant for the same premises is not a renewal but a new lease between the same parties);
- compulsory purchase orders;
- sales of shares in a company, which does not involve the sale of the building in which that company is located, where buildings remain in company ownership;
- lease surrenders.
There may be other types of transaction that it might be argued do not require an EPC, for example, living accommodation at a workplace and tied to a job, or not-for-value transactions, but this will depend on the individual circumstances of any case.
Penalties for not having an EPC
Local weights and measures authorities (usually through their trading standards officers) are responsible for enforcing the requirement to have an EPC on sale or let of a building. Failure to make available an EPC as required by the regulations means the relevant person (i.e. seller or landlord) or a person acting on their behalf (i.e. estate or letting agent) may be liable to a civil penalty charge notice. Trading standards officers may act on complaints or undertake investigations. The trading standards officer may request that a copy of the EPC is provided to them. If requested, a copy of the EPC must be provided within seven days of the request or be liable again to a penalty charge notice for failing to do so. A copy of an EPC can be requested at any time up to six months after the last day for compliance with when the duty was to make it available.
The penalty for failing to make an EPC available to any prospective buyer or tenant when selling or renting a non-dwelling is fixed, in most cases, at 12.5 per cent of the rateable value of the building, with a default penalty of £750 where the formula cannot be applied. The range of penalties under this formula are set with a minimum of £500 and capped at a maximum of £5,000. A further penalty can be issued for failure to provide a copy of the EPC when requested to an officer of an enforcement authority within seven days. This is fixed at £200.
If a penalty charge notice is issued but a person believes it should not have been issued then they can request a review. If they are not satisfied with the outcome of the review an appeal may be made to the county court within 28 days after the notice confirming the penalty charge notice has been received from the local authority. It is the duty of every person with an interest in, or in occupation of, the building to cooperate with any seller or prospective landlord as far as is necessary to enable them to comply with any duty under the regulations to make available an EPC, and allow access to any energy assessor they appoint.