Energy Efficiency Update for Commercial Landlords (“The MEES Regulations”)April 25, 2017
The minimum energy efficiency standard (MEES) was introduced in 2015 by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.
As from 1st April 2018, landlords of non-domestic private rental properties may not grant a new tenancy or extend or renew an existing tenancy unless it has an energy efficiency rating of E or above. This means you may need to improve any properties that currently have an EPC showing rating of F or G. The fine for non-compliance ranges is from £5,000 to £150,000 depending on the breach committed and the rateable value of the property.
This requirement for commercial lettings is subject to some exemptions, namely for properties let on a tenancy of less than 6 months or more than 99 years. Properties that don’t currently need an EPC, will also be exempt including mixed use properties, (for the part that is not commercial), listed buildings (if to install energy efficiency measures would unacceptably alter their character or appearance), temporary buildings and holiday lets (where not leased for majority of year).
However, if your property does not fall within one of these categories, you can still apply to register an exemption on the PRS exemptions register. You can do this between 1st April 2017 and 1st April 2018 when:
- (a) a tenant or a third party has refused you access to improve the energy efficiency of the property, or
- (b) if making the alteration would result in a reduction of 5% or more in the market value of the property, or
- (c) where you are a new landlord, which means for less than six months, or
- (d) where a measure is not cost effective within a seven year payback
These regulations are most relevant to buildings that are older and which require updating. Any new build properties will be built with energy efficiency in mind. If you are buying a property that you propose to let out to commercial tenants consider where it falls on the EPC banding. Make sure that any new leases you grant of non-compliant properties reserve the right to occupy the property with the tenant in situ to carry out energy efficiency improvement.
The issues are important to get right from the outset. We can assist you. Please contact a member of the commercial property team for further information or advice or call us on 0117 930 8477.