The forthcoming changes to the Energy Management Act effective in the Czech Republic from 1 January 2013.
Amendment to Act No. 406/2000 Coll.
The amendment to Act No. 406/2000 Coll., on Energy Management (hereinafter only the Act), shall come into effect on 1 January 2013. This amendment introduces several new obligations to the owners of real estate constructions – new buildings shall have to reach relatively low energy consumption rates and all buildings in general shall have, sooner or later, energy certificates.
The amendment affects all real estate construction owners, no matter whether it is an apartment building, family house, flat, non-residential premise or an office building.
Sale of flats and non-residential premises
As of 1 January 2013 owners of real estate constructions, whether these are flats or nonresidential premises (hereinafter only the unit/s), who decide to sell their unit, will need an energy certificate of the building in which the unit is situated. The Act newly incorporates the obligation of unit owners to present the energy certificate to potential buyers prior to the conclusion of the contract concerning the purchase of the unit. The buyer must be provided with an energy certificate no later than upon signature of the purchase agreement.
In addition, the above mentioned obligation means that if the unit owner is not at that time the owner of the whole building in which the unit is situated, he shall make a written request to the unit owners association to obtain the energy certificate or its certified copy. In this context it has to be mentioned that the energy certificates are not issued for each individual unit, but for the entire building. The Act also legislates for situations when the unit owners association does not provide the owner with the energy certificate despite his written
request. In such cases the owner may replace the energy certificate with electric, gas and heating bills for the last 3 years.
Furthermore, if the unit owner decides to advertise the sale of the unit, he shall ensure that in the information and marketing materials that the indicators in the energy certificate are also stated. Failure to fulfill any of the above mentioned obligations constitutes an administrative offence, for which the unit owner may be imposed a penalty up to CZK 50,000 if he is an individual, or up to CZK 100,000 if he is a legal entity.
Lease of units
As of 1 January 2016 the rules relating to the sale of units shall also apply to their lease. The unit owners shall therefore present potential tenants of their flats or non-residential premises with the energy certificate or bills for all utilities for the last 3 years. As well as present this information while advertising the intention to rent out the unit.
All buildings, including those which are already completed, shall have, sooner or later, an energy certificate. Therefore, if the energy certificate is not processed and issued withinthe next few years on the initiative of any unit owner as a result of his contemplated sale or lease of the unit. The owner of the building or the unit owners association shall ensure theprocessing of the energy certificate within the statutory deadline, regardless whether it is an apartment building, commercial or office building. Deadlines for processing and issuance of energy certificates differ depending on the size of the buildings. Thus, buildings with a total energy reference area of more than 1,500 sq.m. shall have their energy certificate processed until 1 January 2015. The deadline for buildings with a total energy reference area of more than 1,000 sq.m. is set for 1 January 2007, whereas buildings with a total energy reference area of less than 1,000 sq.m. shall have their energy certificated processed until 1 January 2019. The term total energy reference area is defined in the Act as exterior floor area of all spaces in the building with an adjusted interior environment, however measured to the exterior edge of the external walls of the building.
Furthermore, similarly to unit owners, as of January 2013 owners of the buildings are obliged to ensure the processing and issuance of the energy certificate of the building in case they wish to lease the building or sell the building or its compact part. Contrary to what is mentioned above, in the case of a contemplated lease of a compact part of the building the owner is subjected to this duty since 1 January 2016. Please note that the Act defines compact part of the building relatively widely as a storey, flat or other part of the building which is designated for separate use or was adjusted or accommodated for this purpose.
Failing to fulfill the above stated legal obligations constitutes an administrative offence, which may, in certain cases, reach the fine in the amount of CZK 200,000.
In particular owners of new buildings can not avoid the requirement to ensure the energy certificate in from 2013 and beyond. Moreover, all new buildings in connection with it applying for a building permit after 31 December 2012 shall be designed in compliance with the prescribed energy performance requirements implemented at cost-optimal level. Over time, energy performance requirements shall become tighter. For example, buildings with total energy reference area of less than 350 sq.m. (typically family houses) shall meet energy performance requirements with almost zero energy consumption as of 1 January 2020. Again, this shall be phased according to a total energy reference area, buildings with an area of more than 1.500 sq.m. shall meet the above mentioned requirement as of 1 January 2018, while buildings with an area of more than 350 sq. m. shall have this obligation as of 1 January 2019.
The Act’s amendment also applies to building renovations and reconstructions. It governs major or other than major changes of completed buildings. In general, the Act does not legislate that owners act in any prescribed way it terms of renovation or repair; nevertheless it tries to induce them to carry out the contemplated reconstruction in the manner which decreases the energy performance of the building while maintaining costs and expenses at optimal level, i.e. the level which is the most economically favorable for the owner in the course of the lifetime.
After the carried out reconstruction the owner of the building or the unit owners association is obliged to get their energy certificates “updated”. For this purpose it is necessary to maintain the accounting documents and records relating to the reconstruction for 5 years. Therefore, it may be reasonable to involve an energy expert in the reconstruction planning. This may not only decrease the investment expenses, but it may also lead to better energy performance results.
To whom does the amendment not apply?
Buildings for family recreation, typically lodges and cottages, do not have to meet energy performance requirements nor have energy certificates. Buildings with a surface area of less than 50 sq. m, buildings used as places for worships or for religious purposes, industrial and production workshops or agricultural buildings with annual energy consumption up to 700 GJ are also exempt from the above mentioned requirements.
How much will it cost?
Prices for particular buildings may vary as the price amount may depend on several different factors. In general, it may be expected that the energy certificate for a family house will cost about CZK 4,000. Owners of apartment buildings will pay approximately CZK 20,000 or more depending on size and complexity of the building. Of course, owners of large administrative buildings will be required to pay even more. The validity of energy certificates is10 years from the date of its issuance or until a major reconstruction of the completed building, for which it was issued, is carried out.
Who issues the energy certificates?
Only energy experts authorized by the Ministry of Industry and Trade, or energy experts from EU, who have appropriate accreditation, may process and issue energy certificates.
Impact of the amendment and recommendations
Having regard to the above mentioned legislative changes it is obvious that as of 1 January 2013 the owners of the affected real estate property will face not only the increased financial expenses connected with the issuance of the energy certificates but also the need forparticular changes in the procedure and wording of contractual documentation or other template documentation concluded in connection with the sale or lease of their real estate property. Henceforward it shall be convenient to include in the provisions on representations and warranties a statement of the owner that he has fulfilled the statutory requirements, while the buyer or the tenant shall confirm that the energy certificate has been presented to them by the owner. For the avoidance of doubt it may be recommended to enclose a copy of the energy certificate to the contract to form its integral part.