Selling shop lease & everything - do I need an EPC?

[Pete_MK]

Ive been approached to sell my shop as a going concern. I renewed the lease in 2017 back dated to 2016. My new lease expressly forbids me to seek an EPC & there has been no EPC done during my 10 year tenure.

Its a 1960's building, with no heating or air con, it has single glazing & has part flat roof & no insulation in either the roof or walls, I dont think it would meet the minimum of Grade E.

So I read that Landlords need to have an EPC prepared before they sell or lease, but where do I the potentially outgoing tenant stand?

 

[rach88]

You will need to obtain an EPC for the assignment as you are selling your leasehold interest. (See here, search for "assignment"). But if your lease prohibits you from seeking one that puts you in a difficult position. I would recommend that you speak to a commercial property solicitor.

However an assignment does not fall within the scope of "MEES" (minimum energy efficiency standards) so it doesn't matter if it falls below a Grade E. MEES only applies to the granting of new leases (including subleases) - not sales or assignments.

 

[Pete_MK]

Thank you for your response, I have spoken with the Landlord (who didnt know their off the shelf lease had that clause) & he has spoken with his solicitor. He has verbally given me the ok to obtain an EPC, but thinks the onus would be on me to pay for any work.

Your response would indicate I wouldnt have to do anything in relation to the report, which is reassuring, given that the volume of information on various sites only speaks from the landlords perspective.

I have tried posing the question to my CP solicitor, but naturally they are away at present.

The challenge continues....

 

[rach88]

Good news that your landlord is happy to waive the restriction. It makes sense for him, as he'll need the EPC at some point so he's saving a bit of money getting you to pay for it.

But no, you don't actually need to do anything once you get the report! If you read though the Minimum Energy Efficiency Standards official guidance, you will see that it only applies to the grant of new leases (including subleases and renewal leases) but not including assignments. See paragraph 17 on page 15. So as long as you structure your business sale as an assignment (which is the norm anyway), then you are in the clear as far as MEES goes, ie it doesn't matter if the report comes back F or G. Hopefully your solicitor can confirm on their return.

 

[Pete_MK]

Well that looks quite clear

"17.Readers should also note that there are clear differences between subletting (where a tenant may become a landlord for the purposes of the Regulations), and arrangements such as assignment. In situations which do not result in the tenant becoming a new landlord for the purposes of the Regulations, any requirement to meet the minimum standard will remain with the original landlord. Again, appropriate legal advice should be sought if there is any doubt."

I hope my solicitor does confirm & the Landlord doesnt put any hurdles in the way, his solicitors fees are ridiculously expensive without any additional work involved just to sign off the assignment.

Cheers

 

[rach88]

I know, they could make it more user friendly! But in legal terms, there is a clear difference between subletting (you granting a lease) and an assignment (you selling your leasehold interest). The former is caught by the regulations, the latter not.

 

[Pete_MK]

My Solicitor confirmed yesterday, the need for me to have the EPC. That said the Landlord still maintains it wont be him paying for any work, irrespective of the law or grants. Now the challenge of getting one done, ignore anything you read that says they should cost between £50 & £100, my local surveyor wanted £250+vat & most charge up in that region, I can quite see why the Landlord is happy for me to pay.

Thanks for your help

Pete