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Minimum Energy Efficiency Standards in tenanted non-domestic properties

Minimum Energy Efficiency Standards in tenanted non-domestic properties

29th March 2021 - Published by Kuits Commercial Property team

In 2015 the Government introduced Minimum Energy Efficiency Standards (MEES) in an effort to improve the worst performing buildings. In October 2019, the Government consulted on a proposal to tighten MEES to set a more long-term target.

What are the current rules for MEES?

From 1 April 2018, landlords of privately rented property in England and Wales must 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.

These requirements will apply to all private rented properties in England and Wales, even where there has been no change to the tenancy arrangements from 1 April 2023.

What is the new proposal for MEES?

The Government has recently released a consultation on raising energy efficiency standards.

The consultation will allow landlord 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).

One of the main changes under the new regulations would be that landlords must have a valid EPC at all times. The current regime only puts the property within the scope of the MEES regulations if there is a valid EPC in place. If for example an EPC is over a certain number of years old, it would fall outside the MEES Regulations as it would not be considered ‘valid’. The new regime would change that to bring all EPCs within the regulations.

The MEES regulations can be cumbersome for a landlord, particularly those in the practice of renting a building or unit in a shell type condition with no fittings. It would be both costly and time consuming for a landlord to have to fit out and otherwise carry out works to bring the EPC standard to that required, for the tenant to then immediately remove installations to allow it to fit out as it requires for its own use. The consultation suggests that such shell properties should benefit from a grace period to allow the parties to work together to achieve the required standard. This signals a shift from the current regulations which place the whole obligation on the landlord.

It is believed that the proposed changes will “deliver buildings which are cheaper to run for tenants, are responsible for fewer carbon emissions and are closer to being able to accept low-carbon heating systems”. As we continue to work through the COVID pandemic, it is hoped that these benefits will “allow the UK economy to build back greener, and to thrive, as we accelerate toward a net-zero future by 2050.”

What if you fail to comply?

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 consultation proposes that letting agents and online property networks should only be able to market properties for either sale or letting if they are compliant with MEES.

For further details you can refer to the consultation paper.

The closing date for the consultation is 9 June 2021 and a further update will follow once there has been a conclusion.

Get in touch with a Property Law specialist

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

 

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