MEES – easy as ABC?
The Minimum Energy Efficiency Standards (MEES) are primarily governed by 2015 Regulations and supporting secondary legislation, and deal with the energy efficiency of both residential and commercial (or ‘non-domestic’) rented properties, with an aim to improve the same.Recently the Government has announced changes to its MEES plans for commercial buildings, which can be found here. Full details will no doubt follow in due course.
The planned changes (subject to legislation passing) will be:
1). commercial buildings over 1,000 square metres will be subject to a higher requirement of a ‘B’ EPC rating from 2031;
2). buildings under 1,000 square metres are unaffected, they will remain subject to the current rating requirement of an ‘E’ EPC rating; and
3). the planned interim step of having an EPC rating of ‘C’ by 2027 has been scrapped.
This means from 2031 commercial landlords will need to ensure (whether for new or continuing tenancies) that larger buildings are raised to the appropriate standard, or are registered on the Exemptions Register.
Exemptions to improving sub-standard properties include:
1). consent exemption – the landlord has been unable to increase the rating due to the tenant refusing consent, a third party refusing consent or giving consent subject to an unreasonable requirement, or the tenant refusing to give Green Deal funding confirmation AND the landlord correctly registered the same on the Exemptions Register before seeking to rely on it – note, however, that Green Deal funding has been withdrawn;
2). devaluation exemption – the improvements will reduce the building value by more than 5% (as verified by a surveyor) AND the landlord correctly registered the same on the Exemptions Register;
3). 7 year payback – improvements are only required if the energy savings made over 7 years will be equal to or greater than the costs of the improvements themselves;
4). all possible improvements have already been made OR no improvements can be made; and/or
5). heritage buildings – listed buildings and those in conservation areas – are not necessarily required to have an EPC, although there is debate in relation to interpretation of the wording in the Regulations in respect of this point, and assuming a blanket exemption purely on this basis would be short-sighted.
The Exemptions Register, which can be accessed here, shows that there are many registered exemptions.
MEES breaches can result in enforcement action by local authorities. This includes fines (of up to £150,000), and adverse publicity on the Exemptions Register, which is publicly searchable.
In due course, there will no doubt be plenty of disputes between landlord and tenants in relation to issues such as access and the costs of any improvement works, which may be recoverable under service charge provisions within a lease. Parties who are thinking ahead, and entering into so-called ‘green leases’, could help alleviate such risks.
There might also be further changes to the MEES regime if there are any associated changes to the Building Regulations, as there have been in the past. For example, a ‘Type B’ improvement must, amongst other things, comply with Table 6 of the Building Regulations Approved Document L2B. If those standards are increased in the future, then the associated requirement to obtain MEES compliance will be harder to achieve.
