Commercial EPCs hit ailing property market

The introduction of mandatory energy performance certificates (EPCs) for commercial buildings next week will be a fresh blow to the depressed property market, a leading law firm has said.

From 1 October, all commercial buildings marketed for sale or letting will need an EPC, grading their energy efficiency. The estimated cost of a certificate ranges from £1,500 for a small shop to £50,000 for a shopping centre.

Catherine Diggle, partner at law firm LG, said: “The commercial property market is already depressed and the need to produce EPCs will be seen as an unwelcome and potentially significant extra cost at an already very difficult time.”

Diggle also criticised the government for failing to clarify its position on “not-for-value transactions” - certain deals that may be exempted from the EPC rule.

She said: “There is an exception for 'not-for-value transactions' dependant on the individual circumstances, but it is not clear what this actually means as clarification is awaited from the DCLG.

The commercial property market is already depressed and the need to produce EPCs will be seen as an unwelcome and potentially significant extra cost at an already very difficult time

Catherine Diggle, partner at law firm LG

“It may not extend to the sale of properties by insolvent companies at a nil price, which will cause difficulties for administrators and receivers, particularly as the costs could be significant and cannot be recovered from the buyer.”

Diggle said it would be “risky” to assume that transfers of commercial properties where no money changes hands are not required to get EPCs.

Meanwhile, fears are growing that a backlog of EPC work and a shortage of energy assessors will cause delays for developers and landlords hoping for quick deals on their properties.

Industry director at engineer Hully & Kirkwood, Jim Costello said: “The idea behind EPCs is a good one and will undoubtedly lead to great improvements being made on the sustainability of buildings of all types and ages.

“But what the industry doesn’t need at the moment is further delays – especially due to red tape and bottlenecks.”