On 1 April 2018, the new Minimum Energy Efficiency Standards (MEES) came into force as part of the Government’s initiative to reduce CO2 emissions. It introduces a new minimum standard for the renting of commercial property. The Energy Performance Certificate (EPC) which sets out the energy efficiency rating of a property must contain a rating of at least band E. Ratings below this of F or G will result in the letting of the property being prohibited.
An EPC is not needed if the building falls within any of the following categories:
- Listed and protected buildings where the MEES would unacceptably alter it
- A temporary building which is going to be used for 2 years or less
- An industrial site, workshop or non-residential agricultural building that does not use much energy
- A detached building whose total floor space is less than 50m²
- A building due to be demolished by the seller or landlord and all relevant planning and conservation consents have been obtained
- Buildings where the EPC is over 10 years old or where there is no EPC
A building is also exempt if all the following apply:
- The building is due to be sold or rented out with vacant possession
- The building is suitable for demolition and the site could be redeveloped
- The buyer or tenant has applied for planning permission to demolish it
- Tenancies of less than 6 months with no right of renewal
- Tenancies of over 99 years
- The “Golden Rule” – where improvements that could be made would not pay for themselves through energy savings within 7 years on determination by an independent assessor
Exemptions must be registered on the central government PRS Exemptions Register and are valid for 5 years. They are non-transferrable to a new owner or landlord upon sale or transfer of property.
- Where any improvements require third party consent before they can be installed on the property e.g. local authority planning consent, consent from mortgage lenders
- Where installation of specific energy efficiency measures would reduce the market value of the property by more than 5%
- In certain circumstances where it would be inappropriate or unreasonable for the new landlord to be required to comply with the MEEs immediately. This exemption lasts for 6 months
Penalties for non-compliance
Local Weights and Measures Authorities (LWMAs) will enforce the MEES. The penalty for renting out a property which falls below the minimum standard is a civil fine set by reference to the property’s rateable value. The following rates apply:
- For a breach of less than 3 months: 10% of the property’s rateable value between £5,000 and £50,000
- For a breach of more than 3 months: 20% of the property’s value between £10,000 and £150,000
The lease will remain valid between landlord and tenant where the property is let in breach of the MEES or a penalty is imposed.
Further guidance published by the Government can be accessed here.
25th April 2018