Pub HIPs set to hit the trade next year

From 2008 pubs will face energy checks that could hit the value of businesses

All pubs that are sold, rented or built from 2008 will have to have their own Energy Performance Certificate (EPC).

The news comes as a bombshell to the industry, which is largely in the dark about the commercial version of the controversial Home Improvement Packs (HIPs), a scheme which has been plagued by delays.

The Energy Performance of Buildings Directive from Europe, which Britain signed up to in January 2003, could have a knock-on effect on property prices, premiums on assignment, dilapidation schedules and rent reviews - and add yet more red tape.

Pubs over 500sq m in size - the majority in Britain - will need an EPC when sold or rented after 6 April 2008. Those under 500m sq will have to comply by 1 October 2008.

"It is essential the pub industry heeds this wake-up call," said Cookseys DMP managing director David Morgan. "The pub industry will not be able to ignore either the legislation or the political force of hard choices behind it."

Pubs will be rated by an independent assessor on energy efficiency from A-G or could even be marked as a failure. The certificates will last for 10 years and include a list of cost-effective recommendations to upgrade efficiency. Inspectors will look closely at boilers and air conditioning in particular.

For a tenant with a fully-repairing lease, the consequences could be far reaching. When trying to assign a lease, they would have to fork out for the certificate (£500 to £1,000 for HIPs) and then face the choice of either receiving a lower premium if their energy rating is poor or investing to get the building up to scratch. "A failure may effectively mean your pub is unsellable," said Morgan.

Morgan also believes it will have an impact on property prices. "It is only logical that if there are two very similar estate-style pubs, one rated A and the other G, the property rated A will be more valuable, command a higher rent as a consequence and have a higher capital value."

Rob May, of the Royal Insti-tute of Chartered Surveyors, who works closely with Enter-

prise Inns, said: "It is just another bureaucratic ball-ache - yet more red tape. If you have someone valuing the building they already take into consideration double glazing, cavity walls and whether it has a modern boiler."

Christie+Co head of pubs Colin Wellstead added: "If energy efficiency is an issue then you already negotiate on price."

For more information visit the Directive Implication Advisory Group at www.diag.org.uk or phone 0845 365 2468.

Rent and dilapidations impact

Cookseys DMP managing director David Morgan believes EPCs could lead to higher rents and more onerous dilapidation schedules.

Morgan said a leaseholder might be forced by the new regulations, through his dilapidations schedule, to upgrade the pub before assignment. "One year later, the new lessee has a rent review and the pubco says you are now so energy efficient and money-saving, that you must be making more profit. A case is made out for a significant rent increase."

l Read David Morgan's full view at

www.morningadvertiser.co.uk/epbd