The Energy Act 2011 received Royal Assent on 18 October 2011. The Act, once full in force, will implement a number of energy-related measures, which will assist the government in meeting its 2020 carbon reduction targets.
The flagship policy being introduced by the Act is the Green Deal, which is the coalition government’s energy efficiency initiative. It will enable occupiers of domestic and non-domestic premises and private sector landlords, to receive finance upfront from accredited providers to make energy efficiency improvements, which will be paid for through energy bill savings. The government considers that removing the upfront costs of making energy efficiency improvements is the key to updating properties and reducing carbon produced from buildings.
The first Green Deals are expected to appear in October 2012 but much work is needed before then. On 23 November 2011, the Department for Energy and Climate Change (DECC) launched a consultation on the details of the Green Deal. The consultation includes draft secondary legislation to implement the Green Deal and a draft Code of Practice for Green Deal participants. The consultation closed on 18 January 2012. The necessary secondary legislation is expected to be laid before Parliament in the spring.
Some commentators are concerned that the existence of the Green Deal finance plan might make it harder to sell a property. Such a consequence would be unwelcome in an already difficult market
The DECC has stated that it expects a range of institutions (including many well known large companies) to be involved in offering Green Deal finance plans. However, some commentators are questioning the likely take up of the Green Deal with particular concern that the likely level of interest offered on finance loans may be discouraging.
Of particular interest to property owners is that a Green Deal finance plan (some of which could last up to 25 years) will be tied to the property and its energy bill, not the owner or occupier. When a property is sold or rented, the new owner or tenant will become responsible for paying the Green Deal charge, as part of the electricity bill.
The Green Deal will be disclosed using the Energy Performance Certificate (EPC) and buyers / tenant will need to acknowledge in the sale contract / lease that they will be liable for the Green Deal charges payable.
Some commentators are concerned that the existence of the Green Deal finance plan might make it harder to sell a property. Such a consequence would be unwelcome in an already difficult market.
The 2007 Regulations relating to the energy performance of buildings have been amended and the new 2011 Regulations come into force on 6 April 2012.
The regulations apply to both domestic and non-domestic buildings and require an EPC to be produced when buildings are constructed, sold or rented out. In addition, the regulations require regular inspections of air-conditioning systems.
The new regulations are more onerous on agents acting for sellers and landlords. Agents will now need to check whether an EPC has been commissioned before the marketing of any building.
In addition, sellers and their agents should take heed that there is no defence to a failure to obtain an EPC within the first 28 days of marketing a property and so an EPC should always be obtained prior to marketing a property.
James Nadin is a partner at Pennington Solicitors
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