The Minimum Energy Efficiency Standards (MEES) come into effect from 1st April 2018, and it’s important to understand the ramifications if you’re a current or prospective landlord.
The regulations will make it unlawful for landlords to renew existing tenancies, extend existing tenancies, or grant new tenancies if the property has an Energy Performance Certificate (EPC) rating of ‘F’ or ‘G’ (i.e. the lowest 2 grades of energy efficiency), unless they register an exemption. This applies for both commercial and residential properties.
In order to make the minutia of this change more digestible, we’ve broken down the scope of MEES, the exemptions to the law, and penalties for failing to comply in the following short primer:
Landlords will be exempt from having to comply with MEES if the following apply:
Where the breach is for less than three months, the fine is £2,000. Where the breach is for more than three months, the fine is £4,000.
Where the breach is for less than three months, the fine will be equivalent to 10% of the rateable value of the property, subject to a minimum penalty of £5,000 and a maximum of £50,000. Where the breach is for more than three months, the fine will be equivalent to 20% of the rateable value of the property subject to a minimum penalty of £10,000 and a maximum of £160,000.
Landlords need to weigh up the financial cost of upgrading non-compliant buildings with the potential loss of income if a property cannot be rented out. It may also be more difficult to sell the property unless it is upgraded. Landlords may also consider checking the provisions in their existing leases.
Astle Paterson can advise landlords as to whether their properties are within the scope of MEES and review leases to check, for example, whether landlords can recover capital expenditure required for improvements from the tenant.
Contact one of our commercial property specialists directly to learn more.
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