The growing emphasis on sustainability, energy efficiency and conservation in the UK has brought attention to most regulated sectors. Commercial properties are no exemption. The UK government has introduced regulations to ensure that non-domestic privately rented properties meet a minimum energy efficiency standard (MEES). But what are the commercial EPC MEES rules and what do they mean for landlords in England and Wales?
Why is Attention on Commercial Buildings?
First, lets look to why the government think that extra regulation on commercial buildings in necessary. With the target of Net Zero emissions by 2050, it makes sense to cast the spotlight on the sectors with the highest emissions first. Non-domestic buildings account for 12% of the UKs total emissions. By enhancing the energy efficiency of these buildings, we can reduce their reliance on the grid, increase energy security and take one step closer to becoming energy independent. This not only benefits the environment, but can lead to significant cost savings for building owners.
The regulations apply to all non-domestic buildings that require a Commercial EPC. This is most commercial and public sectors buildings. There are a few exemptions, but as a rule of thumb, it is likely the regulations will apply. There are a few cases where a building would not require an EPC. A couple of these are:
- Leases less than 6 months with no option to renew
- Leases longer than 99 years
The minimum energy efficiency standards are currently in a transition stage. First brought in to effect in 2018, and recently amended, the full evolution of the currently planned MEES changes are due to complete in 2030.
- 1st April 2018: Newly rented commercial properties must have an EPC rating of at least a band E. Landlords cannot let properties with an EPC rating of band G or F. This applied to new lets and ongoing tenancies were unaffected
- 1st April 2023: This minimum rating of band E had been extended to cover all existing tenancies, not just new tenancies.
- 2030: Currently under consultation, the government is sounding out the possibility of a significant jump in the MEES for commercial property to a minimum of a band B by 2030.
Exemptions are available. Certain properties may be exempt if, for instance, all possible improvements have been made and the property still doesn’t meet the required standard. However, this is not an automatic process. Landlords must apply for an exemption through the PRS Exemptions Register to ensure that they are on the right side of compliance. Be careful though, if a landlord is found to have registered false or misleading information on the PRS Exemptions Register, they can be fined up to £5,000.
Enforcement and Penalties
Enforcement has been devolved to local authorities trading standards. They have the authority to enforce MEES regulations, impose penalties and request information from landlords to ensure compliance.
Trading standards teams will issue a ‘Compliance Notice’ if they believe a landlord is in breach of the regulations. This requires the landlord to produce specific information to prove compliance. Failure to comply with a compliance notice will land you a fine of up to £5,000.
The fines for breaching are serious too. Ranging from a minimum of £5,000 through to a maximum of £150,000, the exact number will depend on rateable value and the duration of the breach.
- Breaches lasting less than 3 months: Up to 10% of the properties rateable value. The minimum penalty is £5,000 and maximum is £50,000.
- Breaches lasting more than 3 months: Up to 20% of the properties rateable value. The minimum penalty is £10,000 and maximum is £150,000.
If a landlord continues to rent a non compliant property, they can be fined multiple times until compliance is achieved.
It’s crucial for landlords to be aware of these enforcement mechanisms and penalties. Not only can non-compliance result in significant financial penalties, but the reputational damage from having breaches published can also impact a landlord’s business. As always, it’s advisable for landlords to seek legal advice or consult with professionals in the field to ensure they fully understand and comply with the MEES regulations.
The push towards a more sustainable and energy-efficient future is evident in the UK’s stringent regulations on commercial properties. The MEES regulations, while demanding, underscore the nation’s commitment to achieving its Net Zero emissions target by 2050. For landlords, these regulations are not just about compliance but represent a broader shift towards responsible property management. By adhering to these standards, landlords not only contribute to the UK’s environmental goals but also enhance the value and appeal of their properties. In an era where sustainability is becoming a significant factor in business decisions, properties that meet or exceed energy efficiency standards will undoubtedly stand out in the market. As the regulations continue to evolve, staying informed and proactive in meeting these standards will be essential for landlords. After all, the benefits of a greener, more energy-efficient property extend beyond compliance, they signify a step towards a more sustainable and economically sound future for all.
Need assistance understanding your property’s EPC or making energy efficient improvements? Contact us for expert guidance and support.