On the 26th March 2015, the Energy Efficiency Regulations, better known as the Minimum Energy Efficiency Standards (MEES), passed into law imposing new regulations on Landlords and property owners which affect the letting of commercial properties.
UK Energy Surveys (energy consultants to Houston Lawrence) have provided us with six important points relating to MEES that you need to know:
1. All non-domestic property types which require an EPC are in the scope of the regulations.
2. The minimum energy efficiency standard will be set at an “E” EPC rating.
3. It is estimated that up to 20% of non-domestic properties in England and Wales have an F or G EPC rating. (For residential properties this is 25%.)
4. From 01 April 2018, the regulations will apply upon the granting of a new lease (as well as lease renewals) and sublets. (For domestic properties it came into effect in April 2016.)
5. From April 2023, the regulations will apply to all privately rented property in scope of the regulations, including where a lease is already in place and property is occupied by a tenant. For domestic this is April 2020.
6. Financial penalties for non-compliance could be as much as £150,000.
November 2017 update:
Elmhurst now advise that a Listed Buildings going to the market should have an EPC unless “compliance with certain minimum EPC would unacceptably alter their character or appearance”.
Whether this applies to the MEES regulations in 2023 is as yet unclear.
Given the risks to landlords, a full understanding of energy efficiency is required for your property assets, in order to see if you are meeting MEES.
KEY FACTS Minimum Energy Efficiency Standards (MEES)
What are the Minimum Energy Efficiency Standards?
From April 2018 changes to legislation will make it unlawful to agree a new lease for a commercial property with an Energy Performance Certificate (EPC) rating of F or G.
Why is it being enforced?
The Energy Act 2011 contains several provisions that will affect owners of property; the most significant of these is MEES, which aims to improve the energy efficiency of the most energy inefficient properties. MEES also contributes to the UK legislative targets of reducing CO2 emissions for all buildings to around zero by 2050.
Who will MEES apply to?
After the 1 April 2018, the landlord/property owner will need to ensure that the property meets MEES before a lease of more than 6 months and less than 99 years is granted.
As of 1 April 2023, however all privately rented property will be required to meet MEES. It does not apply to sales or licenses.
Who will MEES not apply to?
Properties that do not require an EPC under current regulations will not be required to meet MEES. Moreover, MEES does not apply to short term lettings (of 6 months or less) and to lettings over 99 years or more.
What are the key dates?
April 2018 – The regulations will be enforced upon the granting of a new lease as well as lease renewals, assignments and sublets.
April 2023 – The regulations will apply to all privately rented non-domestic property, including where a lease is already in place and a property is occupied.
Are there any exemptions?
Landlords can be made exempt from MEES if they are able to demonstrate one of the following:
- They have carried out all cost-effective energy efficiency improvements. This is likely to be particularly relevant for Listed buildings
- Measures identified by Green Deal or an alternative government scheme are not cost effective (and devalue the property by 5% or more) fail to raise the EPC rating above an F).
- If third-party consents are not available despite reasonable effort. These exemptions are likely to have a time constraint attached to them.
Are there any penalties for non-compliance?
Financial penalties for non-compliance are linked to the rateable value of the property, and could be as much as £150,000. (For domestic this is up to £5,000.
UK Energy Surveys have based this briefing note on advice from their accrediting body however neither they or Houston Lawrence cannot be responsible for any action taken as a result.