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15th February 2023
In 2015 the Government introduced Minimum Energy Efficiency Standards (MEES) in an effort to improve the worst performing buildings. In October 2019 and also in 2021, the Government consulted on a proposal to tighten MEES to set a more long-term target.
Since 1 April 2018, landlords of privately rented commercial property in England and Wales have had to ensure that their properties are at least an Energy Performance Certificate (EPC) rating of E before granting a new tenancy to new or existing tenants.
From 1 April 2023, these requirements will apply to all private rented commercial properties in England and Wales, even where there has been no change to the tenancy arrangements. From 1 April 2023 there will be a prohibition on landlords of commercial property continuing to let with an energy performance rating of either ‘F’ or ‘G’, unless certain exemptions apply. Landlords should be aware that where a tenant is “holding over” after expiry of a contractual term, this will be caught.
From a practical perspective, MEES doesn’t prohibit a sale of a property but it won’t be attractive to a purchaser if they are inheriting a sub-standard position. Equally, whilst sub-standard MEES doesn’t invalidate a lease, the landlord would be in breach of MEES and exposed to penalties, unless an exemption applies.
In light of the tightening of the rules, landlords should consider provisions in their leases which concern MEES and which may be impacted by the rule changes, including (but not limited to) service charge, rent review, alterations and dilapidations.
The 2019 consultation allowed landlords just over six years to ensure properties are an EPC standard C (1 April 2027) and a further three years to achieve an EPC standard B (1 April 2030). A further consultation in 2021 confirmed the Governments intention to raise the MEES to EPC B or above by 2030 and this would be achieved in two windows. First, requiring all commercial properties to achieve an EPC C or better by 2027 and secondly to improve to an EPC B or better by 2030. The consultation ended in June 2021 but the outcome has not yet been published, with policy proposals yet to be formally implemented.
If the above current regulations and new proposal is not achieved, then the landlord must have registered an exemption otherwise fines can be imposed.
The local authority can impose both financial and publication penalties and penalties are relative to the length of the breach.
For further details you can refer to the consultation paper.
If you are a landlord and would like further advice on how the consultation may affect you, please contact Commercial Property Associate Charlotte Barker on 0161 838 8129 or email charlottebarker@kuits.com