It's now less than one year to go until the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, commonly known as the MEES Regulations (minimum energy efficiency standards) come into effect. It is time to act if you haven't already.
The MEES Regulations (the Regulations) provide that:
- From 1 April 2018 landlords of commercial property will be subject to penalties (subject to some exemptions) if they grant a tenancy where the property has an EPC energy efficiency rating of F or G. This will apply to the grant of new tenancies and lease renewals.
- From 1 April 2023 these penalties will extend to continuing tenancies (subject to certain exemptions) even if there has been no change in tenant. The UK Government has recently issued guidance on the Regulations but there is little of significance in the guidance although not all of it is clear.
We previously posted a more comprehensive summary of the Regulations and the above exemptions in May 2015 which can be found here.
Implications of Breach
- Where a breach of the Regulations exists for less than three months, the penalty is up to £5,000 or, if greater, 10% of the rateable value (subject to a maximum of £50,000).
- Where a breach of the Regulations exists for three months or more, penalties increase up to £10,000 or, if greater, 20% of rateable value (subject to a maximum of £150,000).
- Non-compliant landlords' details can also be published. Tenants, too, should be aware of the implications if they underlet non-compliant property. In that situation you are the "landlord" under the Regulations.
What should you do?
As we said before, if you are a landlord (or a tenant wanting to sub-let) you can –
- Audit your portfolio to identify how many low rated buildings you have.
- Investigate suitable improvements that can be made – the EPC Recommendation Reports make suggestions on how to improve energy efficiency.
- If possible incorporate energy improvements into planned refurbishments.
- Know whether the terms of the leases permit you to carry out any necessary energy efficiency works during the term of a lease and who pays for them.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.