Minimum Energy Efficiency Standards and what landlords of commercial properties need to know
On 1 April 2018, the new Minimum Energy Efficiency Standards (MEES) came into force. Here’s what landlords of commercial properties need to know.
1. A landlord of a commercial property with a valid Energy Performance Certificate (EPC) rating of F or worse is prohibited from granting a new tenancy or letting the property as a result of extending or renewing an existing tenancy on or after 1 April 2018.
2. The MEES do not apply to:
- a property occupied under a licence;
- a tenancy granted for six months or less provided there is no option for renewal or the tenant hasn’t already been in occupation for more than 12 months; or
- a tenancy granted for 99 years or more.
3. An EPC is valid if it was registered no more than 10 years ago.
4. If there is no valid EPC for the property the landlord must consider whether the proposed transaction requires one.
5. There are some instances when an EPC is never required, including a property which has no heating or air conditioning or the property is not designed to be used separately.
6. If a landlord grants a lease in breach of the MEES regulations this may result in a financial penalty or adverse publicity but the breach is not a criminal offence and the lease granted will still be valid.
7. Normally a landlord will make the relevant energy efficiency improvements to a property to bring it up to standard but there are some exemptions. The exemptions include the following:
- the landlord has carried out all relevant energy efficiency improvements but the property still remains below standard;
- a tenant or third party such as a lender has not given consent for improvements to be made or the third party has granted consent subject to a condition that cannot be complied with;
- the relevant improvements would result in a market value devaluation of the property in excess of 5%;
- if a lease has to be granted as a result of a contractual obligation; and
- a renewal lease is ordered by the court.
If you are a landlord who is considering letting a commercial property and you are not sure on your Minimum Energy Efficiency Standards obligations, then contact Ed Barnes, Commercial Property Solicitor at Rix & Kay.