George F. White are offering a service to help achieve regulatory compliance (Minimum Energy Efficiency Standards or MEES) in regards to your Commercial Energy Performance Certificate (EPC). You may be aware of these regulations but may not be aware of the implications or indeed the potential interventions you can make to ensure the ongoing viability of your property as a rental asset.
What are Minimum Energy Efficiency Standards (MEES)?
The Energy Efficiency (England and Wales) Regulations 2015, or MEES, is part of a drive to improve the energy efficiency of privately rented residential, commercial and industrial buildings across the UK.
Building Regulations will ensure that any new properties constructed meet current standards however, the MEES ensure that older, poorer performing buildings are improved. MEES apply to properties with an EPC rating below an F or G.
How are MEES being Introduced?
The regulations are being introduced in a staged approach to ease the transition for private landlords. It is important to consider that the EPC threshold is likely to rise in future.
From April 2018:
Domestic and non-domestic buildings that do not meet the minimum requirements cannot be lawfully re-let to new or existing tenants. Sufficient measures will improve the performance of the building to an EPC rating E or above.
From April 2023:
Landlords must not continue to let a non-domestic property holding an EPC rating of below an E.
Penalties for Non-Compliance…
Penalties for non-compliance in the form of financial penalties are based upon the rateable value (RV) of the property.
The enforcement authority may also publicise the breach through various media platforms.
|Less than 3 Months||up to 10% of the RV of the property or £5,000 (whichever is the greater) up to a maximum of £50,000|
|Beyond 3 Months||up to 20% of the RV of the property or £10,000 (whichever is the greater) up to a maximum of £150,000|
Exemptions and Exclusions
Buildings are exempt for a number of reasons including not being required to hold an EPC in addition too a lease term less than 6 months or a lease term in excess of 99 years.
Landlords are exempt from mandatory improvements if:
▪ An independent assessor shows that energy improvements will not payback within 7 years;
▪ The landlord is unable to gain third party consent either from tenants, superior landlords or where planning permission is required from the local planning authority;
▪ If the market value of the property will reduce by more than 5% as assessed by an independent assessor.
Exemptions can be registered with the PRS Exemptions Register and if agreed will only last for 5 years.
Please note that you have 6 months to improve your EPC rating to at least an E in addition to considering future improvements.