More changes are on their way regarding the Minimum Energy Efficiency Standards (MEES) for commercial properties in the UK.
Energy efficiency is at the forefront of everyone’s minds at the moment. The Government has committed to reduce carbon emissions by 2030 and the message is clear that change is definitely on its way. We are unlikely to see any further significant delays to the proposed legislation as a result of the recent pandemic, therefore action is needed sooner rather than later.
The current position regarding MEES, which has been in place since 1st April 2018, is that it is unlawful for a landlord to grant a new tenancy of a commercial property with an EPC rating of lower than E (unless an exemption applies).
1st April 2023 – minimum EPC rating of E for all existing leases
The important fact that all commercial landlords need to be aware of is that from 1st April 2023, this same rule will apply to all existing leases. This means that subject to limited exemptions, it will soon be unlawful for a landlord to continue to let a commercial property with an EPC rating of less than E.
The time to consider your current portfolio is now.
Government to increase EPC rating to B
The Government continues to review the legislation and has recently consulted on proposals to increase the MEES target for all commercial property even further to a minimum EPC rating of B by 2030.
In addition, a landlord of a rented property will need to have an EPC at all times. At the moment, a property is only in the scope of the MEES regulations if there is a valid EPC in place. This has created a loophole for properties that do not currently have a valid EPC, i.e. an existing EPC has not been renewed after 10 years. However, this loophole will soon be closed. We will know more information when further guidance is issued at the end of 2021.
Further issues to consider
Under the relevant regulations, it is the landlord’s responsibility to comply with MEES and all costs currently fall on them. However, an occupier will not be able to sub-let unless they can demonstrate they comply under the MEES regulations.
Certain exemptions are already in place and we can advise you whether your property falls within one of these categories. It is proposed that a new central database of compliance and enforcement be set up where landlords will submit their compliant EPCs or details of any exemptions. Any exemption will need to be reviewed every 5 years to ensure it remains valid under the regulations.
A clarification has been provided that a listed building should have an EPC but will be able to apply for an exemption if the MEES standard cannot be practically achieved, i.e. by virtue of such works being incompatible with planning or listed building criteria.
The perils of obtaining an accurate EPC are well documented in previous articles on our website. Needless to say, if the Government continues to place so much emphasis on EPCs then it is imperative you obtain the correct advice and an accurate EPC.
Non-compliance brings the risk of high financial penalties. There may not have been many high profile examples, however this is about to change. Bedford Borough Council has recently announced it intends to clamp down on domestic landlords who continue to ignore the legislation. Other local authorities will follow suit and also include commercial properties, as they see this as an easy way of raising revenue. So you have been warned.
How can we help?
We can help you make your properties more energy efficient. Whether it’s improving insulation, lighting or heating, we can guide you through all the regulations and ensure you futureproof your assets. If you’re considering refurbishing or converting a property, please include us at an early stage as many of these aspects can easily be designed and incorporated in your building works and trying to do them retrospectively can be expensive and indifferent.
Any changes you consider will make your property more attractive to potential tenants and should ultimately make it easier to let at a higher rent.
Regardless of the Government’s final response to the consultation, it is clear change is on its way. Be prepared and start planning now.
If you require more information or would like to discuss how we can help make your property more energy efficient, please contact Robert.