Energy Performance Certificates were introduced last year with much fanfare but Rachel Andrew, partner and head of asset management at King Sturge in Birmingham, argues that they may be in need of a radical rethink.
When the EU began driving the debate about Energy Performance Certificates, the concept seemed so perfectly suited for its time. Such issues as energy efficiency and carbon footprints had moved from the environmentalists’ agenda, to become the subject of day-time conversations and dinner party chatter.
The same topics were also high on the agenda for developers, agents, clients and investors alike, especially at a time when energy costs were spiraling.
The EPC seemingly offered a cost-effective and transparent solution, allowing everyone in the property world to assess the respective energy efficiency and carbon footprint of buildings.
The new-style efficiency audits were seen as critical in both lowering current running costs and power bills, and stimulating the evolution of the next generation of energy-conscious buildings.
The idea of an A-G rating – as previously introduced for white goods throughout the EU – also appealed as an effective ‘headline’ means of communicating complex underlying technical data.
Unfortunately, the EPC is a classic example of how a well intentioned idea can go wrong and where the practical aspect of new legislation isn’t thought through.
With a limited number of companies in the market place who have trained assessors available we are seeing expensive EPC surveys – which are not user-friendly, and take weeks to arrange and carry out - being prepared for a relatively small number of transactions.
It is our experience that the theory and the practice are adrift in a number of areas. Two particular issues are related to how long it can take to get the certificate issued and then actually being able to use the completed certificate and the recommendations report.
Taking the first issue, the number of people signing up for training courses has not matched expectations because of uncertainty about the level of work that would be available and this was made worse over the summer, as the impact of the slowdown in the property market became more widely felt.
At the same time though, the legislation stated that EPCs would be demanded from October 1st, 2008 for anyone selling or leasing a building with floorspace of more than 50 square meters.
Between 75 per cent and 85 per cent of the buildings in Birminghamwould now require EPCs if they came on to the market, but there are only sufficient assessors in the region to cope with a small fraction of the total.
Perversely, the dramatic slump in property transactions has prevented a crisis, but there are still delays of several weeks, and the cost of surveys has inevitably risen.
As far as the second issue is concerned it is questionable whether the theory of the EPC legislation has been borne out in reality, in terms of offering solid guidance about how to make a building’s energy uses more efficient, or to shrink its carbon footprint.
The ‘recommendation’ report, which assessors are trained to provide, includes generic recommendations generated automatically by the software. They do not include detailed data about either the feasibility, or the cost-effectiveness, of energy-saving proposals, making it very limited in practical terms. The reality is that one recommendation is usually that further investigation is required which results in delays and more costs before any specific actions can be implemented.
As experienced managing agents we know that there are no quick wins when it comes to property and there are certainly no cost free solutions to the improvement of energy efficiency, so we need to be more pro-active. We are working closely with landlords and occupiers to ensure that we plan in advance to get EPC’s produced at the right time to avoid delays.
We are also working with a specialist firm, Power Efficiency to ensure that reports are property specific and can where possible produce more meaningful recommendations. It is the subsequent investigation and implementation of effective energy saving initiatives that is important and the recommendations need to be studied carefully in order for these to follow.
There are still also basic – and important – elements of the legislation which have yet to be explained, notably the suggestion that the calculation about whether a building requires an EPC will be based on its “useful floor area”, without explaining what the phrase means.
Our Building Consultancy team is experiencing the same problems and they are warning that building owners are liable for fines of up to £5,000 for not having an EPC in time, while newly competed buildings without an EPCwill not be able to obtain a Building Regulations Certificate.
The property market will begin to turn upwards at some time in the future and when this happens the assessment system may not be able to cope.
The merit of the original legislation remains unarguable, but the reality of EPCs needs to change, and to change very swiftly or there will be chaos ahead.