Changes to Minimum Energy Efficiency Standards | Commercial Property
Cutting your Carbon Footprint for Compliance
As you may be aware, the Minimum Energy Efficiency Standards (‘MEES’) came into force in April 2018. So whilst MEES created a legal obligation on commercial landlords setting a minimum band of an E rating relating to Energy Performance Certificates (‘EPC’) for all new commercial lettings, it was only the first stage of the move towards more energy efficient commercial buildings.
We are therefore now rapidly approaching the second significant deadline set by the government of 1st April 2023. This date may seem a long way off, however it potentially places a huge burden on landlords. That’s because the 1st April 2023 is the deadline for landlords to improve their properties to ensure that the energy rating for all existing leased premises, granted prior to 1st April 2018, have a minimum Energy efficiency rating of ‘E’.
If you are a commercial landlord that also owns residential investment properties, you should note that the deadline to improve the energy rating for existing lettings for residential proprieties to an E rating is 1st April 2020. We trust your lettings agent has been in touch.
Landlords should act now to ensure that they have complied with the regulations before the deadline or risk facing penalties.
The Governments’ recent consultation has now outlined their aims to deliver energy and carbon savings in the medium term. By 1st April 2030 they will seek to achieve EPCs of a B rating for all future commercial lettings. This will create a significant duty on landlords to improve their properties so they are energy efficient, with works possibly costing thousands, in order for a landlord to legally let their property.
What are the penalties for non-compliance?
Non-compliance of MEES could be extremely costly for a commercial landlord as penalties are calculated on the rateable value of the property. Landlords could see themselves fined from £5,000 to £50,000. There is also a penalty for failure to comply with a penalty notice within 3 months, the additional fine ranges from £10,000 to £150,000. You have been warned!
Commercially speaking…
The result of the statutory measures mentioned above will mean landlord’s costs may increase in the short term (and therefore affect income levels) however in the long term bringing properties up to standard could potentially increase the value and attract more competitive lending rates from mortgage lenders. It would therefore be wise for landlords to plan ahead to meet the 2023 standards over the coming 3 years and so avoid paying out large expenses in the rush to meet the statutory requirements before the deadline.
If you do have any questions as a commercial landlord please contact Holly Kisiel, Commercial Property Solicitor on 01905 730450 or email hkisiel@thursfields.co.uk
