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Commercial landlords need to get ahead on energy standards

The new Minimum Energy Efficiency Standard (MEES) comes into force for commercial landlords on April 1, 2018. The regulations will not allow landlords to start a new lease unless their property has an Energy Performance Certificate (EPC) rating of E or higher. Figures suggest that nearly one-fifth (18%) of commercial properties in the UK don't currently meet the minimum standard. With less than two years until the regulation comes into force, experts recommend commercial landlords tackle the problem now.

The regulations and exemptions

The Energy Performance Certificate (EPC) evaluates the energy efficiency of a property, from A (most efficient) to G (least efficient). Buildings account for around 40% of the European Union's energy consumption, and MEES is intended to reduce this figure. The legislation will come into effect in stages.

The first date is 1 April 2018, which will prohibit new leases on properties rated F or G. On 1 April 2023 the enforcement will be backdated to all leases which began before 2018, making it unlawful to renew leases with longstanding tenants. Exemptions are available for commercial properties leased for six months or less, leaseholds of 99 years or longer, assets without side walls (such as car parks), and properties already exempt from having an EPC (such as places of worship).

Big consequences for non-compliance

Local authorities will be responsible for enforcing MEES through their Trading Standards Officers. They will be able to serve compliance notices if they believe that a non-compliant property has been let within the past 18 months. If the landlord is unable to provide evidence to the contrary a penalty will apply. Penalty charges vary and are based on property value as well as the length of the breach. If the property has been non-compliant for three months or less, the fine will be £5,000 or 10% of the property's value (up to £50,000). The figure is substantially higher after three months at £10,000 or 20% of the property's value (up to £150,000).

If you're a property manager looking for advice on EPC regulations, we recommend speaking with a Commercial Energy Assessor.

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