Minimum Energy Efficiency Standards: What building owners need to know

The new Minimum Energy Efficiency Standards (MEES) Regulations, which came into force on 1st April 2018, will shake up the energy performance of non-domestic buildings in England and Wales.

From this date, it will be illegal to grant a new tenancy to new or existing tenants for privately rented commercial properties that fail to meet minimum energy standards.

Under the new regulations properties will need to achieve the minimum acceptable Energy Performance Certificate Rating (EPC) of E or higher. Properties that do not reach this level will be referred to as ‘sub-standard property’. MEES will penalise privately rented properties without a valid Energy Performance Certificate (EPC), or with an EPC rating of F or G.

From April 2023, the regulations will be strengthened. Minimum Energy Efficiency Standards will apply to non-domestic properties in the private rental sector where a lease is already in place and the property occupied. It will be illegal to continue letting the property should its EPC rating fall below the E threshold. This applies even when there has been no tenancy renewal or extension, or new tenancy. The regulations will, therefore, present a major risk to both landlords, who could be left with vacant properties, and tenants, who might need to seek new premises.

How will MEES be enforced?

MEES will be enforced by Local Weights and Measures Authorities. Properties with an EPC rating below E can still be marketed after April 2018, but the prospective landlord and tenant must both agree to a package of energy efficiency measures to achieve compliance prior to the lease being granted. This legislation also applies to sub-leases, affecting occupiers or managed office providers who sub-let property and will be treated as the main landlord. It is currently unclear whether landlords will be able to recharge the cost of energy efficiency improvements to tenants.

Please note: Scotland is not currently affected by the MEES regulations, but is subject to a similar regulation.

How do I know if I need to comply with MEES?

Landlords must comply with regulations from April 2018, unless they meet any of the following exemptions:

  1. Buildings not required to have an EPC e.g. places of worship
  2. Leases of less than six months, but subject to a maximum of two consecutive leases with the same tenant
  3. Leases of more than 99 years
  4. Buildings where there would be no consent to carry out energy efficiency improvements
  5. Circumstances where the energy efficiency improvements would cause a material net decrease in the property value
  6. Where improvements wouldn’t be able to pay for themselves within 7 years
  7. Where all feasible work has been undertaken, but the property still remains rated below E

If a valid exemption is granted, landlords must complete the PRS Exemptions Register.

However, any landlord flouting the new regulations will be subject to a fine of between £5,000 and £150,000.