What are the Minimum Energy Efficiency Standards (MEES)?
The MEES regulations came into force on 1st April 2018. From this date any commercial property that has an EPC rating of lower than an “E” is not permitted to be rented to new tenants or to have an existing tenancy renewed until such time as an “E” rating is obtained. This means that for commercial properties which fall below this requirement steps will need to be taken to improve the rating.
It is important that landlords are fully aware of their duties under MEES as in the event that the landlord continues to let a commercial property in breach of MEES fines can be imposed. If any such letting continues in breach of MEES for up to three months then a fine of 10% of the property’s ratable value could be imposed, subject to a maximum of £50,000.00. If that letting continues for longer than three months this fine can be increased to 20% of the property’s ratable value capped at £150,000.00. It is important therefore that landlords are fully aware of their obligations and ensure compliance.
There are some exemptions which would allow a substandard property to be let or continue to be let. These largely fall into four categories the first of which is a temporary exemption of six months which can be granted to new landlords.
The second is the devaluation exemption which allows for an exemption in circumstances where the necessary energy efficiency measures would decrease the property’s value by 5% or more. There is then the seven year payback test which will only require landlords to make such improvements where the cost of those works are likely to be recovered by the landlord in savings in the seven year timeframe, and finally the consent exemption which applies when a third party consent to the proposed improvements is required and although sought has been refused.
MEES Regulations and the future
From 1st April 2023 the prohibition on continuing to let sub-standard commercial property will be extended to cover all existing commercial leases. This means that landlords are well advised to undertake a full review of their commercial property portfolio to ensure compliance ahead of 1st April 2023.
How Adams Harrison can help you?
Given the penalties that can occur from failure to comply with the MEES Regulations it is important that you seek professional legal advice on your obligations. At Adams Harrison we have a team of experienced commercial property solicitors who can advise you on a wide range of commercial property related issues including the MEES Regulations.