April 24, 2017

Government releases guidelines for upcoming MEES legislation

April 2018 marks changes to legislation which will make it unlawful to agree a new lease (including lease renewals) for a commercial property with an Energy Performance Certificate (EPC) rating below an E. This will expand to include all privately rented property from 1st April 2023.
The new laws may require some landlords and property owners to make targeted improvements to their buildings in order to get their energy efficiency up to standard; which is likely to take some time to implement.

Key Dates

  • 1 April 2018- The regulations will be enforced upon the granting of a new lease as well as a lease renewal
  • 1 April 2023- The regulations will apply to ALL property which is privately rented in scope of the regulations, including where a lease is currently in place and a property is occupied.
    Implications of MEES

As of February 2016 estimates suggest that around 21% of non-domestic properties have an EPC rating of an F or G, leading these properties to fall short of the target E rating or above

  • The valuation of a properties not meeting the standard will be affected by around 10% as their marketability will be diminished.
  • Rent reviews on F and G rated properties may be adversely affected.
  • There may be implications for dilapidation assessments, where landlords have a legal responsibility to ensure the property is maintained to the standard agreed in the contract.

Financial Penalties

Financial penalties for non-compliance will be linked to the rateable value of the property, but could be as much as £150,000.

Exemptions

There are some instances that have been underlined by the Government where Landlords may be exempt from compliance with MEES.
Landlords can be made exempt if they are able to demonstrate one of the following:

They have carried out all cost-effective energy efficiency improvements.
Measures identified by Green Deal or an alternative government scheme are not cost effective.
If third-party consents are not available.

What Next?

Landlords and their agents should check their current EPC and follow recommendations should it be an F or G rating. Following this a further Energy Performance Certificate should be commissioned to achieve the target rating of E or above.

For further information, please contact E-First chartered surveyors on 01564 775 771 or click here. The government document is available to download here.