Deadline looms for commercial property owners in South Africa

Non-residential buildings in South Africa will be required to submit and display an Energy Performance Certificate (EPC) from 7 December 2022.

The certification aims at making buildings in South Africa more energy efficient while reducing the strain on the national electrical grid and helping the country meet its emissions commitments in the future.

The intention is to grade buildings based on how much energy they use per square metre. The EPC gives buildings an energy efficiency grading between A and G, with A being the most efficient and G being the least efficient.

Gazetted by the Department of Mineral Resources and Energy in 2020, the new requirement will make it compulsory for non-residential buildings in South Africa to declare their energy consumption by displaying the EPC at the entrance of their buildings.

Globally, the built environment accounts for around 40% of carbon emissions and 28% of energy consumption, making it a critical target for improved efficiencies.

This has seen similar energy performance certificate systems currently operating in the EU and the UK, launching as early as 2007.

Nomaswazi Nkabinde – a real estate and conveyancing practice attorney at CMS – says that although the consequences for poor energy grades may be low, those that fail to obtain and display an EPC could be fined up to R5 million and the possibility of imprisonment for up to five years.

Properties affected and the EPC criteria

According to CMS South Africa, the requirement applies to offices, entertainment facilities, educational institution buildings, and places of public assembly such as indoor sporting facilities and community centres.

It is important to note that the new legislation does not apply to factories and manufacturing plants.

The application criteria of an EPC are as follows:

• Buildings have to be more than two years old.
• Buildings with a net floor area of over 1000m2 for government buildings and 2000m2 for privately owned buildings must follow the certification requirement. The calculations exclude garages, car parks, and storage areas.
• The EPC must be issued by an accredited body under SANS 1544:2014.

Building owners have until December 2022 to comply with the new building energy regulations.

Process of obtaining an EPC

Kagiso Mahlangu – head of our Real Estate and Conveyancing Practice at CMS – said to obtain an EPC, the building owner will have to gather information such as annual electricity consumption, the net floor area, information on any areas to be excluded, and vacancy rates.

They must then contract a South African National Accreditation System (SANAS) accredited inspection body (IB) to audit the information.

The IB will, in turn, submit the energy performance value to the South African National Energy Development Institute (SANEDI), which inputs it into the National Building Energy Performance Register.

From there, a unique number is generated for the EPC and sent back to the IB, which issues the EPC to the owner so that it can be displayed at the entrance of the building.

Implications of the EPC

The certification primarily aims to make building owners aware of areas where they could be more energy efficient.

It also means that tenants and other users of these buildings can make more informed decisions about their occupancy and use of the buildings.

It’s also worth noting that the EPC is only valid for five years, after which the building must be assessed again.

“Having to do this every five years is quite a big deal,” said Mahlangu.

“It comes at a high cost for building owners, especially those who don’t play in the same leagues as major commercial property owners,” she added.

Additionally, EPCs are required to sell property in the EU and the UK.

While the role they play in South African building sales will be slightly different – given that anyone can view EPCs – buyers will have a much more comprehensive overview of the use of energy of a building, incentivising building owners to be as energy efficient as possible.

Mahlangu noted that regardless of its implications, the certification requirement is undoubtedly a step in the right direction.

“Whether you are classified as an A or a G, the rating will act as a motivating force to ensure that building energy efficiency is kept front of mind to ensure that we are all contributing to climate change,” she said.