Minimum Energy Efficiency Standards (MEES) – A guide for commercial buildings
- 13 February 2018
- Commercial Real Estate
From 1 April 2018 the Energy Efficiency (Private Rented property) (England and Wales) Regulations 2015 impose a new legal standard for minimum energy efficiency which will apply to rented commercial buildings. From this date it will be against the law for a landlord to grant a new lease of commercial property with an EPC Rating of F or G. This will also prevent the granting of new subleases and lease renewals.
From 1 April 2023, it will also be in breach of the law for a landlord to continue to let a commercial property with an F or G Rating. This means that a lease that was legal when granted will become unlawful in April 2023.
These new rules will apply unless the landlord registers an exemption and these are set out below.
These rules were brought in to implement an EU Directive. The Government estimates that 18% of commercial properties hold the lowest Energy Performance Certificate (EPC) Ratings of F or G. These low ratings pose a threat to the UK meeting its carbon reduction targets for 2020 and 2050. While Building Regulations are used to ensure that new properties meet current energy efficiency standards, MEES will deal with the UK’s older buildings.
MEES does not apply to all commercial properties. Those which are excluded from the Regulations are:
Exemptions
In addition, the landlord can let a building free of the MEES regulations in the following cases:
Any exemption that applies must be registered on the Central Government PRS Exemptions Register by 1 April 2018.
An Exemption lasts for 5 years and is personal to the landlord making the registration. Accordingly, if the landlord sells the property, the new owner is obliged to apply for a fresh exemption.
A landlord should also be aware that the exemption for lack of tenant consent will only remain valid so long as that specific tenant remains the tenant. Accordingly, if the lease is assigned to a new tenant, the landlord is obliged to obtain consent from the new tenant.
Agreements for Lease
The regulations do not prevent the entering into of an Agreement for Lease between the landlord and a new tenant. It is only the granting of the lease itself that is prohibited if the EPC reveals a Grade F or G property.
For buyers of investment properties:
For existing landlords:
From this date it will be against the law for a landlord to grant a new lease of commercial property with an EPC Rating of F or G. This will also prevent the granting of new subleases and lease renewals.
Penalties for breach of the Regulations
The Regulations will be enforced by the Local Weights and Measures Authorities who are able to enforce civil penalties against the landlord which are set by reference to the property’s rateable value:
In addition, the landlord’s breach will be published on the exemptions register for a minimum of 12 months.
What is the tenant’s position if there is a breach of the Regulations by the landlord?
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Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.