DILAPIDATION'S & ALTERATIONS

The relationship between landlord and tenant can sometimes be strained and when the end of lease is reached the decisions around additions and alterations that have been made to premises over time may bring about last minute changes to the property. For example, what happens when a tenant has, within an industrial building, constructed office, storeroom and ancillary spaces (such as toilets and kitchenettes) which in the absence of goodwill between the parties, may be removed and made good by the tenant as part of the dilapidation's process.

The energy assessment may have been conducted some time before the property is vacated by the tenant and therefore may include these internal structures, thereby showing more of the internal space put over to spaces for which there might be an expectation of heating, providing work space for the staff of the business. On final handover however, these spaces may have been removed and the EPC will not reflect the actual space being considered by a new tenant or potential owner. The EPC would therefore give a very false rating for the future use of the building.

If this situation can be anticipated then an assessor might chose to bring potential changes in the property to the fore by including a reference, in the first line of the EPC report address, to those aspects that are likely to change should the EPC be viewed after the dilapidation's have been completed.  This might be a reference to the floor area given over to offices at the time of assessment. Some quick mental arithmetic by an interested party will soon highlight if office space has reduced by say 70%.

If you are faced with a similar situation then it might be necessary to use one EPC to support the marketing effort in the period before the outgoing tenant vacates the property and a new updated EPC (which reflects the removed features of the building) following departure of the old tenant and for the purpose of supporting the lease (which will require compliance with the PRS(MEES) Regulations). The cost of any 2nd EPC (prepared by the same assessor as the 1st) should be minimal given that much of the data collected at the original assessment will remain relevant and the report preparation time should be much reduced.