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Last April we brought you news of the Minimum Energy Efficiency Standards regulations (MEES), and how they will affect landlords after April 2018 – it will be unlawful to let a property in England or Wales without an Energy Performance Certificate (EPC) of at least ‘E’, whether the lease is a new one or a renewal. These regulations will also apply to all existing commercial tenancies from April 2023, and all domestic tenancies from 2020.

MEES guidance for commercial landlords

Recently the Department of Business, Energy and Industrial Strategy (BEIS) has published more information on how the MEES regulations apply to non-domestic private rented property. The document is aimed at non-domestic landlords, Local Weights and Measures enforcement authorities, letting agents, and other property management agencies. It covers:

  • How to work out if a property is covered by the new MEES regulations
  • The steps that must be taken in order to ensure a property complies
  • Advice on identifying appropriate energy efficiency measures
  • How to calculate which energy efficiency measures will be most cost-effective
  • What exemptions apply, and how to register a valid exemption
  • How the MEES regulations will be enforced
  • An explanation of the appeals framework and how it will operate (although further guidance on this aspect is due to be published later in the year)

When do the MEES regulations not apply?

The PRS Exemption Register will be open from 1st April 2017, although there is no need to register an exemption until a new tenancy triggers the need to comply with MEES. Most exemptions are valid for five years, and cannot be transferred to a new landlord; they include the following circumstances:

  • If an independent assessor confirms that all relevant energy efficiency measures have been implemented – or that any further improvements would have a payback period of seven years or more – and the building still does not reach EPC ‘E’
  • Where an independent surveyor concludes that the relevant energy efficiency measures would, if installed, devalue the property by more than 5%
  • When third party consent is required for the energy efficiency upgrade, but it has not been given despite reasonable efforts to obtain it (this might include consent from a tenant, a superior landlord, or a planning authority)

There are also cases in which MEES doesn’t apply – which means the EPC ‘E’ grading does not need to be achieved, nor does the property need to be put on the exemptions register:

  • Buildings not required to have an EPC (e.g. industrial sites, some agricultural buildings, temporary structures, and certain listed buildings)
  • Tenancies of less than six months (where there is no right of renewal)
  • Tenancies of more than 99 years

EPC ‘E’ ratings may be downgraded to ‘F’

It’s worth pointing out that properties with an EPC of ‘E’ pre-dating April 2014 may be downgraded when their next EPC becomes due, since the most recent changes to Building Regulations will have had an impact on their rating. Particularly early attention may be required, so as not to get a nasty surprise close to the exemption cut-off point. However, whether this is a factor for your property or not, it will pay to plan ahead rather than leave such compliance matters to the last minute. Aside from the concerns surrounding lost revenue and financial penalties for not complying with MEES, urgent works always carry a premium cost.

We recommend reviewing your estate now, so that you can pinpoint which properties fall short of the required standard, and not only plan ahead for the capital expenditure that will be required on band ‘F’ and ‘G’ buildings, but also ensure you can schedule energy efficiency improvements to fit in with regular maintenance works and lease expiries, as well as negotiate the best-value contracts with suppliers.

Our EPC improvement report service covers heating, cooling, ventilation, domestic hot water, controls, lighting and building fabric – and most importantly, recommendations for the improvements that will not only perform in terms of payback period, but also in positive impact on the EPC rating.

To find out more, please call us on 01206 266755 or email mail@ajenergy.com.