The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 established a lowest level of energy efficiency for commercial and domestic privately rented property in England and Wales. This is known as the Minimum Energy Efficiency Standards (MEES). The latest for commercial properties is just days away so landlords must be prepared but it is never too late to take action to ensure that your properties are compliant.
From 1 April 2023, MEES will be extended to apply to all private rented commercial properties in England and Wales, even where there has been no change in tenancy arrangements. This legislation will make it unlawful for a landlord to continue to let a property if the energy performance certificate (EPC) rating is an F or G.
There are exemptions which can be registered in the following situations:
- Demonstrable evidence that the cost of purchasing and installing the necessary improvements does not achieve a seven-year payback test.
- Where all relevant energy efficiency improvements that can be made, have been and the property remains below an EPC grade E.
- Certain energy efficiency improvements may legally require third party consent, and this was sought, refused, or granted subject to a condition that the landlord cannot reasonably meet.
- Where the landlord has obtained a report from an independent surveyor who is on the Royal Institution of Chartered Surveyors (RICS) Register of Valuers advising that the installation of measures would reduce the market value of the property, or part of, by more than five percent.
- There is also a temporary exemption where a person has suddenly become a landlord.
There is a significant financial risk to landlords in penalties, ranging from £2,000 to as much as £150,000 for non-compliance as well as suffering reputational damage.
To ensure that all properties are compliant, landlords need to be supported in understanding the risks across the property portfolios, obtaining EPCs, securing exemption assessments managing improvement works to have maximum impact.
The Government has expressed its intention to raise the minimum level for non-domestic property further to EPC grade B by 2030, and the potential for an interim measure of EPC grade C in 2027. Even where action has been taken for the looming deadline, now is the time to take stock of your portfolio and look to the future both financially and logistically to ensure that the next steps do not trip you up!