The Energy Act 2011: how will it affect landlords and tenants?

The Energy Act 2011: how will it affect landlords and tenants?

Although it’s not yet in force, section 49 of the Energy Act 2011 is set to have a huge impact on around 20% of all commercial property. If you’re a landlord or tenant, you need to take note now.

At the moment, when marketing and selling a commercial building or property, landlords have to provide an Energy Performance Certificate (EPC). This simply shows how energy efficient that property is, whether A (most efficient) or G (least efficient).

As mentioned in this recent Law Society Gazette article, one of the possible implications of section 49 is that a landlord of non-domestic property can’t lease it if it falls within a certain banding of poor energy performance. The landlord, then, may have to spend more money than they initially budgeted to bring that property up to standard. This could mean the cost is passed on to the prospective tenant in the form of a rise in rent.

Whether a tenant of an existing lease would have to pick up this cost remains to be seen. It’s not yet known whether the Act will be retrospective or only apply to new lettings. There are examples in the past where tenants have had to foot the bill when new legislation has been passed – the Disability Discrimination Act 2004 being one. To comply with the Disability Discrimination Act 2004 and the standard statutory compliance clause in leases, existing tenants of commercial property had to make sure there was sufficient disabled access to their building.

For landlords and tenants, it’s a case of watch this space. But if you’re concerned about how the Energy Act 2011 will affect you, please call me on 01482 324252 or email to see how we can help you.

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