What are the new Minimum Energy Efficiency Standards?
In 2018, new legal standards for the minimum energy efficiency of commercial buildings was introduced. These laws were enacted in an effort to reduce energy wastage and update aging infrastructure to meet carbon emission targets set for 2020 and 2050. Initially an EU Directive, it is likely that these standards will remain despite the eventuality of Brexit.
It is therefore important for landlords to meet and exceed these standards to avoid receiving fines and penalties. The minimum energy efficiency standard (MEES) is rated through your property's energy performance certificate (EPC) rating. Currently it is an offence to grant, extend or renew a lease of a commercial property with an EPC rating of G and F (the lowest two ratings). These rules update from 1 April 2023, where, after this time it will be against the law to continue to let a commercial property with an EPC rating of G and F. This means that if a lease was legal, it will cease to be after the new date.
Who do MEES apply to?
MEES applies specifically to landlords of commercial properties. If you are the landlord of a residential property the rules are slightly different. Tenants of commercial properties will not have to enact these changes under the typical tenant’s covenant. But it is best to check the lease to ensure it does not contain a specific clause to this effect.
Are there any exceptions?
Yes, there are a few ways to avoid having to meet MEES, but please check these with us, as the Regulations are specific about the criteria for exemptions:
1.The landlord has carried out recommended energy improvement works, but the property is still an F or G rating.
2.The improvements do not provide a payback in energy savings over a 7 year period.
3.The cost of purchasing and installing the cheapest recommended improvement exceeds £3,500; a submission is required where at least three quotes are provided to demonstrate this.
4.The landlord has failed to obtain third party consent which is needed for the works, despite using reasonable efforts to do so, or consent has been given subject to a condition with which the landlord cannot reasonably comply.
5.A suitably qualified expert provides written advice that the improvements would result in a devaluation of the property by 5% or more, or that the works would have a negative impact on the fabric or structure of the property.
What are the penalties?
If you are found in breach of the currently MEES you could face severe financial penalties, the extent of which will depend on the length of the lease:
For properties leased less than three months, the penalty is up to either £5,000, or 10% of the rateable value of the property, whichever is higher, and with a maximum penalty of £50,000.
For properties leased for more than three months, the penalty is up to £10,000 or 20% of the rateable value of the property, whichever is higher, and with maximum penalty of £150,000.
You can also be fined for providing false or misleading information to the Private Rented Sector (PRS) exemption register and also for failing to follow a compliance notice, the cost of which could be up to £5000. Finally, you can also be put on a ‘name and shame’ register.
IF WE CAN'T IMPROVE YOUR EPC RATING, WE WILL NOT CHARGE
Karsons take big building mentality and bring these to their basics. It’s simple principles that makes energy efficiency measures most efficient. We can help design your specific energy strategies from individual components to systems like lighting or heating control, rainwater harvesting and others. Give us a call to discuss your ideas. We would love to assist in making them a reality.