Landlords Beware - New 'Mees' 1 April 2023 –Ignore if you dare

Soon:

An update to the Minimum Energy Efficiency Standards (MEES) means that from 1st April 2023 commercial properties with an EPC Rating of ‘F’ or lower will be prohibited from being let unless exempt.

This important change includes new tenancies (as it currently does) but most importantly will also affect existing tenancies, where an EPC is already in place.

Failure to make improvements to the EPC Rating could land You, the Landlord, with a fine based on 10 to 20% of the Rateable Value of the subject premises (up to a maximum of £150,000).

This update is designed to improve the energy efficiency of the commercial property stock in England and Wales, particularly salient given the current energy crisis.

A review of any property portfolio would be prudent. If any rating is ‘F’ or lower, initially advice should be sought from M&E consultants and Energy Assessors. Any significant works required will thereafter most likely need tendering with a schedule of works drawn up and the work overseen.

Current EPC’s for both commercial and domestic properties can be found here: https://www.gov.uk/find-energy-certificate

Exemptions from the MEES regulations, as mentioned above, can be sought on properties, including in the following circumstances:-

• where Third party consent is required but not forthcoming, such as from Planning Authorities, Mortgage Lenders or the Tenant;
• where the installation of energy efficiency works will reduce the market value of the property by more than 5% (backed up by a formal RICS Registered Valuers report);
• for a 6 month period when you have only recently become the Landlord under various prescribed circumstances;
• where the recommended energy saving methods will not pass “The Seven Year Payback Test”.

For more advice and information an official Government handbook for Landlord’s has been prepared: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/824018/Non-Dom_Private_Rented_Property_Minimum_Standard_-_Landlord_Guidance.pdf

The Future:

Whilst currently legislation only includes for this soon to be implemented change it is widely expected that the MEES regulations will become even more stringent in the next few years reflecting the Government’s ‘Net Zero’ aims.

The Government has confirmed their intention is for a minimum rating of ‘B’ by 2030. To work towards this there is a consensus in the industry that a minimum rating of ‘C’ will be required in 2027 and a minimum of ‘D’ has been mooted for 2025.

Further advice:

For professional assistance in specifying and overseeing significant energy efficiency improvement works, please contact:-

Nicholas Booker BSc(Hons) MRICS MPTS, Associate Director & Chartered Building Surveyor at our Crawley office

E: booker@graves-jenkins.com T: 01293 401040