Minimum Energy Efficiency Standards: What does it mean for you?

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (SI 2015/962) (MEES Regulations) aim to enhance the energy efficiency of residential and commercial private rented properties. Part 3 of MEES Regulations specifies the minimum energy efficiency standards. This overview focuses on non-domestic properties under Regulation 20.

Since 2018, new commercial property leases must have at least an E rating on the Energy Performance Certificate (EPC). As of April 2023, this rule also applies to all ongoing leases, regardless of renewal or assignment.

Since then, landlords cannot grant or continue leases for properties with an EPC rating below E.

What is an EPC?

An EPC is a certificate which provides information about the energy efficiency of a property. Generally, an EPC will be valid for 10 years. An EPC is required whenever a property is sold or let.

Does it apply to me?

The MEES Regulations apply to properties that are required to have an EPC, and where the property is, or will be, subject to a lease, periodic tenancy, reversionary lease, or tenancy at will.

The MEES Regulations do not apply to properties that are not legally required to have an EPC, such as properties which are owner-occupied or where the property is subject to a licence to occupy, a short-term lease of less than six months (with no right to renew), or a long lease of over 99 years or more.

Are there any exemptions?

If the property’s EPC rating is below the minimum required by the MEES Regulation, you should consider whether one of the exemptions may apply. The exemptions include:

• Where the consent of a third party is required and that consent has been refused This also applies where the consent has been granted, but is subject to conditions that the landlord cannot comply with

• Where an independent chartered surveyor has advised that the works would devalue the property by more than 5% or would damage the property

• Where all cost-effective improvements have been carried out, but it hasn’t improved the rating to the minimum require

• Where it can be shown that the improvements would not pay for themselves in energy savings over a seven-year period.

It is important to note that if you believe that one of the above applies, you must register the exemption on the PRS Exemptions Register and re-register every five years.

What if I don’t comply?

Non-compliance with the MEES Regulations could leave you liable to a fine, per breach, based on 10-20% of the rateable value of the property, between a minimum of £5,000 to a maximum of £150,000.

What should I be doing?

The government has made plans to increase the minimum required EPC rating to C from April 2027, and then to B from 2030.

It is important to review any leases you have granted as landlord to ensure that they comply with the MEES Regulations. For example, if you have granted any lease prior to April 2018, you should ensure that the EPC ratings of those properties are at least an E.

If you are planning to buy a property with the intention of letting it to a tenant in the future, you should take into consideration the potential costs of works to improve the EPC rating in line with future requirements.