Konect 62, Knottingley

Due Diligence and EPC Review for Unit K161, a 160,000 sq.ft industrial unit
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Our client was taking on a long lease of a brand new 160,000 sq.ft industrial unit. The terms of the lease included a green clause which forbade the EPC rating being negatively impacted by any tenant fit out works. As part of the tenant’s due diligence SEA were engaged to conduct an EPC Review of the existing new build EPC.

The EPC review comprised a two-stage process:

Stage 1 – Review and Confirm the Landlords EPC was correct.

Stage 2 – Assess the impact of the proposed tenant works to the property.

Reviewing the landlords EPC is a critical stage. For this property the landlord had an A rated EPC. To achieve such a high rating, a lot of technical documents proving the performance of the building’s components are required. Without them only basic default performance specifications can be used.

Although the landlord had forwarded a comprehensive O&M manual to the tenant, none of the technical documents needed to replicate the A rating had been provided.Reviewing the landlords EPC is a critical stage. For this property the landlord had an A rated EPC. To achieve such a high rating, a lot of technical documents proving the performance of the building’s components are required. Without them only basic default performance specifications can be used.

A view of the large space for the warehouse building in Knottingley. We helped the tenant with their due diligence and with changes to the lease plan based on the EPC assessment

Although the landlord had forwarded a comprehensive O&M manual to the tenant, none of the technical documents needed to replicate the A rating had been provided.

Based on what had been provided, we could only achieve a B rating for the building. This would have meant the Tenant was starting at a significant disadvantage when analysing their alterations works.

After requesting and reviewing the additional technical documents needed, it was discovered that the Landlords EPC rating did not hold up to scrutiny. The inputs used by the landlords EPC assessor did not match what had been installed in the property. The A rating EPC being referenced in the lease was an over estimate of the building’s actual performance.

In order to “maintain” the “A” rating, the tenant would have needed to spend £100,000s to get the building to perform to the starting point.

After discussing our findings with the tenant and the landlord, the two parties were able to agree terms and the lease was signed.

An added bonus was that the tenant works being proposed would improve the EPC rating and the landlord would now have a verifiable A rated building.

For the tenant this highlighted the value of carrying out due diligence on the property and potentially saved them £100Ks on unnecessary works. With EPCs now being referenced in the terms of leases, it shows that the EPC ratings being provided should not taken at face value.

For the landlord this highlighted a weakness in the new build EPC field that they were unaware of. After spending millions of pounds on the development of the site, this situation could have cost them a highly valued tenant willing to sign a long-term lease.

Our in-depth experience and technical knowledge of EPCs, MEP design and Building Control meant we could resolve the situation amicably for all parties and to everyone’s advantage.

Konect 62, Knottingleys - Project Highlights

Cost Saving

Saved the tenant £100,000s in unnecessary improvement works and potential legal fees.

Completed in 2 Weeks

Appointed at short notice, we worked quickly, allowing the lease to be signed in time.

Averted a Legal Dispute

Our work prevented the landlord and the tenant from a serious legal dispute.