From 1 April 2023 it will be unlawful for landlords to let sub-standard non-domestic properties. B P Collins’ property team wants to make sure you are fully compliant, otherwise you could face a penalty of up to £150,000.
What are the Minimum Energy Efficiency Standards (MEES)?
The MEES form part of the UK government’s plan to reduce emissions and achieve a goal of net zero by 2050. Since 1 April 2018, all non-domestic private rented properties needed to hold an Energy Performance Certificate (EPC) rating of band F or G in order to grant a tenancy to new or existing tenants.
Why are the MEES important for you?
From 1 April 2023 the MEES are changing. Landlords must not continue letting a non-domestic property if that property has an EPC rating of band F or G. The property must achieve a minimum EPC rating of E in order to comply with the MEES. The new MEES apply not only to new tenancies, but also existing ones.
The MEES are set to become increasingly stringent, calling for a minimum EPC requirement of C by 2027, and an EPC rating band of B by 2030.
Who do the MEES apply to?
The MEES regulations apply to landlords letting non-domestic properties under either an assured tenancy, a regulated tenancy or a domestic agricultural tenancy. The MEES regulations do not apply to tenancies of over 99 years or of less than six months (with no option for renewal).
Some commercial properties are not required to comply with MEES. Some examples include: listed buildings, industrial sites or workshops with very low energy consumption, temporary buildings, holiday homes, buildings that are to be demolished, temporary buildings (planned time of use of two years or less).
There are separate MEES regulations that apply to domestic properties which have been in force since 1 April 2020.
Exemptions
There are certain circumstances under which a landlord can apply for an exemption to the MEES. If one of the exemptions apply, and the landlord has successfully registered the exemption, the landlord will be able to continue letting the property without it being unlawful until the expiration of the exemption.
It should be noted that there is no fee associated with the registration of exemptions.
Examples of exemptions include:
- All relevant improvements made – if the property is still below an EPC band E after improvements have been made up to the cost cap (£3,500 incl VAT), or there are none that can be made.
- High cost – if the cost of installing the cheapest improvement would exceed £3,500 (incl VAT)
- 7-year payback – if the energy efficiency improvement works are not paid for within seven years by the energy savings as a result of the works.
- Lack of consent – the landlord has been unable to obtain any necessary third-party consent (e.g. tenant, superior landlord, mortgagee, freeholder, planning departments) to undertake works to improve energy efficiency.
- Devaluation – if in making energy efficiency improvements it would devalue the property by more than 5%. A report from a surveyor would be needed.
- Recent landlord – if you have recently become a landlord, you will be granted a 6-month grace period to ensure that the property is MEES compliant.
Most of the exemptions last for five years, after which it will expire, and the landlord must try again to improve the property’s EPC rating to E. If this is not possible, prior to the expiry of the exemption, the landlord may apply for a further exemption.
How to register an exemption
Should one of the above exemptions apply, you can register it here.
To register an exemption, you must:
- Create an account;
- Enter the address of your property;
- State the type of exemption you want to register; and
- Upload all the required evidence, including a copy of a valid EPC for the property.
All exemptions apply from the point you register them.
Failure to comply
Landlords who do not comply with the MEES regulations by 1 April 2023 will be liable to a civil penalty of up to £150,000.
What should you do now
With just under three months until the MEES regulations are enforced, it is important that landlords act now to avoid incurring any penalties. Ahead of the 1 April 2023 landlords should:
- Check the EPC of the property and identify whether any improvements are needed to achieve at least EPC band E.
- If improvements are needed, ensure works are carried out to achieve a minimum EPC band E rating.
- If an EPC has not already been obtained, ensure a valid EPC is in place by 1 April 2023.
- Apply for any available exemptions in sufficient time if applicable.
- As the MEES are forecast to become increasingly stringent in the coming years, assess whether more substantial long-term improvements could be made.
- Landlords do not have an automatic right to enter a property to comply with MEES regulations. As such, consideration should be given to access rights when granting new leases.
Please contact B P Collins’ property team for further information on how we can assist you with ensuring compliance by calling 01753 889995 or email enquiries@bpcollins.co.uk.
