Associate solicitor Gemma Smith, in our Commercial Property team, provides an update on the Minimum Energy Efficiency Standards (MEES) for non-domestic private rented properties.
In June this year the government ended its consultation on Minimum Energy Efficiency Standards (MEES) for non-domestic private rented property. The proposal set 1 April 2027 as the target for increasing the minimum energy efficiency rating for the purposes of MEES to a C, and 1 April 2030 for increasing it further to a B. This will have a wide ranging impact on commercial landlords, particularly as 89% of all non-domestic EPCs lodged between 2009 and 2020 are below a B rating. As with the current requirements, if these minimum standards cannot be reached, exemptions may be available but any exemption must be approved and registered.
Requirement for landlords of non-domestic properties to have a valid EPC
A major change proposed in the consultation is the requirement for a valid Energy Performance Certificate (EPC) to be in place for let non-domestic properties at all times. The MEES Regulations only apply to a property where there is a valid EPC in place. EPCs expire after 10 years and currently there are only certain circumstances where they need to be renewed. Once an EPC has expired it is no longer valid and the property will be outside of the scope of the MEES regulations. If the new requirement is introduced, which all indications suggest it will be at this point, then non-domestic rented properties will always be subject to the requirements of the MEES Regulations.
The proposed timeline is that by 1 April 2025 all non-domestic rented properties must be registered on a central government register and have a valid EPC in place. This will potentially be problematic for landlords with non-domestic buildings which would not be compliant under the current regime (see below) but do not currently have a valid EPC. Landlords will then have until 1 April 2027 to bring the properties to a C standard, where required and until 1 April 2030 to improve to a B standard; or to register an approved exemption.
The consultation paper indicates that the (currently unclear) position surrounding Listed Buildings will be clarified and that an EPC will be required for Listed Buildings including those in conservation areas. This will mean that such properties will fall within the scope of MEES, but as with other properties, exemptions may be available.
Current MEES requirements
The Minimum Energy Efficiency Standards as set out in the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 came into force on 1 April 2018. Regular reviews were envisaged as part of the UK’s commitment to bring all greenhouse gas emissions to net zero by 2050.
The current requirements for non-domestic buildings under the regulations are that, subject to certain exemptions:
- As of 1 April 2018 commercial landlords have not been able to lawfully grant a tenancy (even a renewal to an existing tenant) if the property has a valid EPC with a rating of F or G.
- From 1 April 2023 commercial landlords will not be permitted to continue accepting rent from a tenant of a property which is already let if the property has a valid EPC with a rating of F or G.
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This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.