Update: Minimum Energy Efficiency Standards – does your property yet comply?

Posted 07/06/2016

Scott Hilton, Commercial Property Solicitor and Sophie Howard, Trainee Solicitor consider below the implications of the new Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 SI 2015/962

The new Minimum Energy Efficiency Standards (‘MEES’) regulations, aimed at improving the energy efficiency of the UK’s domestic and non-domestic building stock, will have a significant impact on many landlords, tenants and investors, who may need to consider action now to avoid potential fines and protect incomes from their properties.

From 1 April 2018, it shall be unlawful to let eligible properties, again, both domestic and non-domestic, unless they achieve a minimum energy efficiency standard in the Energy Performance Certificate (‘EPC’) of rating ‘E’.

The MEES regulations will apply equally to the grant of a lease to a new tenant and renewal of a lease to an existing tenant. From 1 April 2023 the MEES regulations will also apply to existing leases. The energy efficiency standards will have implications for rent reviews, the valuation and marketability of properties and may also affect dilapidations assessments.

The MEES regulations are in part aimed at helping to achieve the legislative target of a minimum 80% reduction in carbon levels in 2050 from 1990 levels. Buildings are responsible for almost 40% of the UK’s energy consumption and carbon emissions. The regulations aim to improve the energy efficiency of the UK’s most inefficient properties (around 18% of non-domestic properties are understood to be in the very lowest EPC ratings, ‘F’ or ‘G’) and deal with a perceived reluctance on the part of owners and occupiers to carry out energy efficient works.

With some time to go before the 1 April 2018 deadline, the message to landlords, tenants and investors is to get ready and plan ahead as to what energy efficiency improvements may be required to inefficient properties together with the implications of the regulations on the content of new or existing lettings. The minimum energy efficiency standard will be reviewed at five year intervals, meaning that greater cost efficiency may be achieved by improving property to a higher standard of energy efficiency than that currently required by the regulations.

The regulations do contain various exemptions and safeguards and if you require further information on anything covered in the above or wish to discuss the regulations in more detail, please contact Scott Hilton (scott.hilton@ashtonslegal.co.uk; 01284 732 142).