Summary
Both the seller and their agent may be fined if the EPC Regulations are not complied with. Some of the Regulations apply to the agent only, for example the duty to ensure that a property is not marketed until an EPC is commissioned. Other provisions apply jointly to the seller and the agent acting on their behalf, for example the obligation to obtain the EPC within seven days of marketing the property (with a further 21 day grace period).
As well as the potential to be fined itself, property agents could face a claim for recovery of the fine from the seller if the agent has failed to advise on the EPC requirements. Agents may also potentially face a negligence claim from a seller should a sale fall through because of their failure to comply with the Regulations.
From a practical perspective it would be advisable to ensure that an EPC is actually obtained before putting a property on the market. The front page of the EPC can then be included in the property particulars from the start of the marketing process and a full EPC given to potential purchasers up front. This would avoid the risk of the EPC requirements being forgotten in the course of the marketing process.
Key EPC requirements under the new Regulations (from 6 April 2012)
- An EPC is required for both residential and commercial properties whether for sale or for rent.
- The EPC must be commissioned before the property is marketed.
- All reasonable efforts must be used to ensure the EPC is actually obtained within seven days of the property being put on the market. If this is not obtained there is a further 21 day grace period but if the EPC is not obtained within that timeframe this will constitute a breach of the Regulations and a fine may be payable.
- Written property particulars must include the first page of the EPC (once received). You cannot now only include the asset rating. The first page however can exclude the address of the property if the address is not included with the particulars for confidentiality purposes.
(Written particulars are particulars which include at least two of the following: a photograph of the building or any room, a floor plan, the size of rooms in the building, the measured area of the building, or if for rent the proposed rent. This includes electronic particulars).
- The new Regulations confirm that you cannot delay providing the full EPC until just before exchange. The EPC will need to be provided to a potential buyer or tenant without delay.
Liabilities as an agent
The Regulations provide that before marketing the property a person acting on behalf of the seller/ landlord must be satisfied that an EPC has been commissioned for the property. Agents should therefore not proceed to market a property until they are sure this is the case.
The obligation to use all reasonable efforts to obtain the EPC within seven days applies to both the seller/ landlord and a person acting on behalf of the seller.
The provisions applying to providing particulars of the property apply to whoever is acting on the seller/ landlord's behalf in providing the particulars.
Failure to comply with the EPC Regulations can result in a penalty charge notice being issued, normally by a Trading Standards Officer. The level of the penalty charge varies according to the type of property. When selling or renting out a dwelling the charge is currently £200. The penalty for commercial property is in most cases 12.5% of the rateable value, subject to a maximum penalty of £5,000 and a minimum of £500.
Fines of £200 are also payable if EPC documentation is not provided within seven days of being asked to do so by an enforcement authority. It is an offence to obstruct an officer of an enforcement authority who is seeking to inspect EPC documentation.
Penalties can only be issued up to six months after the breach.
Repeated non-compliance may result in an agent being reported to the Office of Fair Trading.
If an agent fails to advise the seller of the requirements to provide an EPC and the seller is fined, the seller may take action against the agent for recovery of the fine. It is also possible that if an agent was negligent in failing to obtain an EPC which led to a sale falling through that a seller could make a claim against their agent for losses incurred.
Exclusions
If a residential property was put on the market before 6 April 2012 the old timescales for providing an EPC for a residential property applies. But if a property is taken off the market and then re-marketed after 6 April 2012 the new regulations will apply on the re-marketing. There are no transitional provisions for commercial properties so it would appear that providing an EPC without delay and the rules regarding including the front page in the particulars will apply from 6 April to properties already on the market.
The EPC Regulations do not apply to all buildings. A building for the purposes of the Regulations is "a roofed construction having walls, for which energy is used to condition the indoor climate". This includes buildings with fixed heating, mechanical ventilation or air conditioning. Buildings that only have hot water or electric lighting do not fall within the Regulations.
The Regulations also will not apply where the property in question falls into one of the following categories:
- Places of worship
- Temporary buildings with a planned time of use of 2 years or less
- Industrial sites and workshops with low energy demand
- Non-residential agricultural buildings with low energy demands
- Stand-alone buildings with a total useful floor area of less than 50m2 which is not a dwelling
- If it can be demonstrated that the building is to be demolished and redeveloped as set out in the Regulations.
In the event a fine is issued there are defences set out in the Regulations that may be raised in defence of liability to pay a penalty charge notice, such as where a tenant is relocating urgently.
EPCs do not need to be provided if there are reasonable grounds to believe that the prospective buyer or tenant is unlikely to have sufficient means to buy/rent the building, is not genuinely interested or is someone that the seller/landlord is not likely to be prepared to sell/rent to.
If you have any queries regarding your obligations to provide EPCs, or if you think that you may have a defence to the need to provide an EPC or to a fine incurred, it would be advisable to seek legal advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.