From 1st April 2023, all leased non-domestic properties in England and Wales must now comply with the Minimum Energy Efficiency Standards (MEES) Regulations 2018, meaning that the property must be rated as E or above on its Energy Performance Certificate (EPC) for the lease to be lawful.
The Minimum Energy Efficiency Standards were introduced in 2018 in order to improve the energy efficiency of the built environment, which is responsible for around 18% of UK greenhouse gas emissions according to 2019 data from the UK government’s Department for Business, Energy and Industrial Strategy (BEIS).
Since 2018, these regulations have only applied to new non-domestic rental agreements and lease extensions, however this has now been extended to cover all existing leases, including properties that are currently occupied.
To raise the EPC score, landlords are encouraged to implement energy efficiency improvement measures, such as those provided in their current EPC Recommendation Report.
Landlords who are in breach of the regulations (i.e. currently renting out a property with an EPC rating of F or G) must take steps to ensure their property meets the required standard, otherwise they could face a financial penalty. These penalties can rise as high as £150,000 (or 20% of the rateable value of the property – whichever is higher), depending on the length of time the landlord has been in breach of the regulations.
There are certain types of property which are exempt from MEES regulations, such as;
- Short lettings of 6 months or less;
- Lettings of 99 years or more;
- Properties which do not require an EPC
- E.g. Certain listed buildings (where energy efficiency improvements would unacceptably alter their character or appearance), temporary buildings, buildings used for worship, or buildings that are to be demolished.
In addition, there are circumstances under which landlords can apply for a temporary exemption;
- Recommended measures do not pass the Seven Year Payback Rule (5-year exemption)
- i.e when implementing recommended measures on the EPC will not yield energy savings that pay for the cost of implementation within 7 years
- Recommended measures will devalue the property by more than 5% (5-year exemption)
- All cost-effective improvements have already been carried out (5-year exemption)
- Despite reasonable efforts, consent from third-party for improvements to be made has not been received (5-year exemption)
- Third parties can include planning authorities, tenants, and higher landlords.
- Recently becoming a landlord (6-month exemption)
- This exemption is intended as a grace period for those who have become a landlord due to unexpected circumstances.
At ITPEnergised we are committed to supporting clients to meet these new regulatory requirements, as well as helping to implement energy-saving measures that can also provide a range of other benefits, including improved tenant satisfaction, reduced energy bills, and a more sustainable property portfolio.
Our experienced EPC assessment team are fully accredited to generate EPCs for Level 3 and 4 buildings, meaning our team is qualified to assess Building Regulations compliance and produce EPCs for the majority of non-domestic buildings in the UK.
Added value provided by ITPEnergised:
- Expert advice that goes beyond minimum EPC compliance.
- Identification of key drivers of EPC ratings and analysis of cost-effective measures to improve building EPC ratings and reduce carbon emissions.
- Proven track record of managing large EPC portfolios for major property companies.
- Extensive experience in supporting clients in compliance with the Minimum Energy Efficiency Standards and Section 63 Legislation.
- Accurate EPC outputs from precise on-site data gathering.
- Our EPC team can draw on experience from areas such as: building energy auditing, HVAC design and energy efficiency measures.
We also offer additional energy service capabilities including; energy management, ESOS & SECR compliance and renewable energy feasibility.
If you need further information or support, please contact Claire Shepherd, Head of Property & Urban Regeneration at claire.shepherd@itpenergised.com.
