This article was submitted by Greenaway Scott
With the clock ticking to the implementation of the Minimum Energy Efficiency Standards (MEES) regulations, Greenaway Scott takes a look at the impact that this could have on landlords, tenants and their property advisors.
From 1st April 2018 it will be unlawful to let buildings (both commercial and domestic) in England and Wales, which do not achieve a minimum EPC rating of E.
This will have a significant impact for landlords, tenants and their property advisors. MEES Regulations prohibit a new letting, or the renewal of an existing lease of a commercial property, that has an EPC rating of F or G unless an exemption has been validly registered.
The exemptions last for five years and will need to be lodged on the central register. You are able to register an exemption from complying with MEES if you are a landlord and you can satisfy one of the following:
- All relevant cost-effective energy efficiency improvements under the Green Deals “Golden Rule” have been carried out;
- Consent to undertake any works is refused by a third party; or
- A report prepared by a suitably qualified expert states that making the relevant energy improvement would result in a devaluation of the property by 5% or more or that the works would damage the property.
The penalties for renting out a property of fewer than three months in breach of the MEES Regulation without an exemption being lodged is the equivalent to 10% of the property’s rateable value.
This is subject to a minimum penalty of £5,000 and a maximum of £50,000. After the 3 months, this penalty will rise to 20% of the rateable value and so the consequences of non-compliance could be severe to your business.
To ensure an early compliance, all property assets need to have a valid EPC and Landlords should have an Energy Efficiency Plan in place to improve the energy efficiency of the property. A strategy to ensure compliance will avoid increased costs or non-compliance penalties later on.
This is subject to change and will be reviewed by the government in 2020 where it seems that MEES will be extended to cover all leases, including where a lease is already in place.
The information contained in this article is for information purposes only and is not intended to constitute legal advice. If you require further information our property team would be more than happy to assist you. Please contact us at [email protected] or call us on 029 2009 5500 to speak to one of our team.