In a few months’ time MEES (Minimum Energy Efficiency Standard) regulations will be implemented on commercial property. This will prevent landlords granting a lease if a property has an Energy Performance Rating lower than band E.
Whether or not they appear meaningless to many, it is generally known that a sale or lease, for the vast majority of residential and commercial properties, requires an EPC (Energy Performance Certificate).
There are undoubtedly thousands of commercial properties – estimated at around 20% of the total stock – which are run-down retail units, workshops in barns, old industrial buildings and offices that do not meet this criteria. MEES will not apply to buildings already exempt from an EPC such as listed properties, places of religious worship, buildings under 50 sq metres, etc. Other premises will become impossible to market or rent from 1st April 2018 until they meet the minimum standards of Band E, which means the landlord will need to upgrade non-compliant buildings. There will be a period of grace for a couple of years, until 1st April 2020, when this legislation will also impact on the housing market.
Commercial landlords will be exempt from compliance with MEES if:
1. All viable cost-effective energy efficiency improvements (within a 7 year payback) have already been implemented. The golden rule is that it can be proven that all relevant energy efficiency improvements have already been made
2. Consent to undertake works is refused by a third party such as a Local Authority or the tenant.
3. An expert, such as a Chartered Surveyor, advises in writing that improvements would devalue the property by 5% or more, or that such works would damage the holding.
Exemptions will, however, only last for five years and will be lodged on a central Government register.
Penalties for non-compliance – enforceable by councils at a local level – will be based on a percentage of the property’s rateable value, but could range from £5,000 to £50,000. The Department for Business Energy and Industrial Strategy published the non-domestic private rented property minimum standards guide in February 2017 and it is available online at: https://www.gov.uk/government/publications/the-private-rented-property-minimum-standard-landlord-guidance-documents