Trading standards officers may be preparing to trawl through Land Registry records to spot high profile commercial property transactions that have failed to comply with new energy performance laws, real estate specialists at law firm Reed Smith have warned.
Information that is freely available to the public can be cross-referenced by investigators to pinpoint landlords and developers who have failed to provide controversial new energy performance certificates (EPCs) to incoming occupiers, says Reed Smith commercial property associate Simon Robinson.
The Government has been phasing in the new EPC regulations since the spring, starting with the largest transactions.
Since then there have been two further trigger points, which have brought progressively smaller deals into the firing line.
October 1 saw the implementation of the final stage when almost all deals will be included, says Mr Robinson. That could also be the time when trading standards officers take a greater interest in the new regulations.
“There is a view that they may well use the Land Registry records to find out what transactions have taken place, but no-one really knows how they are going to deal with enforcement issues,” said Mr Robinson.
“It might be that they will do this to show that they have got teeth, although it must be said that the fines - ranging from £500 to £5,000 and linked to the rateable value of the property - are pretty small compared to the cost of providing a certificate in the first place.”
Mr Robinson says the rules are still unclear.
“It may well be that any fine will not just be a ‘one off’ penalty , but could be levied repeatedly whilst there is a breach of the regulations,” he said.
This could present particular problems for vendors who have failed to obtain an EPC, because they would then have to seek special permission from the new owners for EPC assessors to be given access to the premises.
“Landlords might have sufficient rights to go into a building to carry out the inspection, but once a vendor has sold the premises they have no right of entry, and the new owner is not likely to be interested in someone else’s problem,” said Mr Robinson.
“It may be that a vendor could write to the new owner offering to pay for an EPC if they are prepared to do one, but the fact is that they have no control over the situation,“ he added.
The regulations have been introduced as a “green” measure, and effectively amount to an “energy MOT” for commercial property. The certificate should be ready to show to any potential occupant who expresses an interest in buying or renting premises.
“They operate like the washing machine labelling system you see in electrical stores, and sellers and landlords will have to provide specific information about the energy efficiency of a building.”
In the medium to long term many in the real estate sector believe properties will be taxed in accordance with their EPC grading - a move that will provide an extra incentive to address poor energy performance in buildings.
Mr Robinson added: “We are just coming out of the summer period, when deals went quiet, so we are starting to see things to pick up just in time for the regulations to come into force fully.
“Even for a small building it can cost hundreds of pounds, and although I don’t expect deals to fall through as a result, it is another cost which the sector could do without at present.”
But Mr Robinson advises clients that they need not rush to get EPCs for all their properties before the October 1 deadline - although he says most of his major clients are acting now to avoid delays further down the line.
“A certificate only needs to be available when a potential buyer or tenant comes forward,” he said. “If a deal really moves fast it can even complete without one, provided that the inspection process for an EPC has been set in motion.
“However the advice I would give to vendors is that if they don’t want the deal to be delayed, or to get their fingers burned because they can’t gain access to premises to carry out a retrospective EPC, they should be proactive.
“If they don’t they may well find that potential purchasers take advantage of the lack of a certificate to delay the deal and give them a further chance to beat down valuations in a falling market,” he said.