Does your property comply with the upcoming Energy Performance Certificate regulations?
From 1 April 2018, landlords will not be able to rent out their commercial properties if they do not meet a minimum energy efficiency standard (MEES). The reason for this change is to help the government to meet its obligations in the Energy Act 2011 to improve energy efficiency across commercial properties.
Commercial properties will need to have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). For most landlords this will mean that without the minimum performance rating, they will not be able to grant a new tenancy or to renew an existing one. For continuing tenancies, the new rules will apply from April 2023 but only if a new EPC is required on the relevant date.
Which commercial premises and leases do the MEES regulations not apply to?
EPCs are required for the majority of commercial premises. Most offices and industrial buildings will be included but there are some exceptions:
- Properties with no roof, or with no walls
- Places of worship
- Temporary buildings (less than 2 years anticipated usage)
- Detached buildings with less than 50m2 floor area
- Certain listed buildings
- Buildings due to be demolished
- Properties that use no energy to condition the indoor climate
- Leases of over 99 years and less than 6 months with no right of renewal
What can I do to meet the MEES regulations?
An EPC is valid for a period of 10 years from the day of issue unless it has been replaced by a more recent EPC in which case it is the latter EPC that is valid. If the EPC rating is below E or is at risk of becoming so, an Energy Efficiency plan should be put in place to improve the energy efficiency. Many landlords will be able to improve the efficiency of their property by making relatively minor changes such as filling gaps to stop heat escaping through windows, or using energy efficient light bulbs. If you believe that your commercial property can fall foul of the regulations it would be wise to take action now and have your property assessed by a qualified and accredited energy assessor who will prepare an EPC report which will have a list of recommended measures to improve your property’s energy efficiency performance.
The implication of failing to comply
If you property is non-compliant with the MEES regulations, your local authority may serve a compliance notice on you in which they will ask you to remedy the situation. If the situation is not remedied or the steps undertaken to comply with the regulations are not sufficient, a local authority may issue a penalty notice. The penalty for renting out a property for a period of three months or less in breach of the regulations will be equivalent to 10% of the property’s rateable value subject to a minimum of £5,000 and a maximum of £50,000. For a period over three months the penalty is 20% of the property’s rateable value with a minimum of £10,000 and a maximum of £150,000.
For advice on any of these issues, please contact Agata Marosz in our Commercial Property team.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.
