6 Dec 2017, 14:02

Minimum Energy Efficiency Standards for commercial landlords

What is MEES?

The Minimum Energy Efficiency Standards (MEES) set out a minimum standard of energy efficiency that commercial and residential properties will have to meet before granting or renewing a tenancy agreement in the UK.

From April 2018, landlords of properties with an EPC rating of F or G will have to take measures to either improve the efficiency rating of their building or demonstrate that the property is exempt. Those that don’t comply face the possibility of substantial fines.

This new law has been introduced under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, to help the UK meet its carbon reduction targets for 2020 and 2050. It is estimated that 18% of commercial properties will be affected by this law, holding EPC ratings of F or G.

What can I do?

The MEES regulations are based on Energy Performance Certificate (EPC) ratings. Check the EPC rating for any private rented properties that you own and if they have an EPC rating of F or G these new regulations will apply to you.

Your EPC certificate will have an accompanying Recommendations Report. This Recommendation Report identifies what measures are deemed to be necessary – Remember, you only need to implement those measures with a payback period of 7 years or less.

Am I exempt from MEES regulations.

Exemptions to MEES do exist. If a property is proven to be exempt, a landlord must provide details and evidence of the exemption to a centralised self-certification register – the PRS Exemptions Register, allowing them to let, or continue to let, a sub-standard property.

Exemptions include:

  • EPC exemptions - Building which do not require an EPC certificate are also exempt from MEES.
  • Seven-year payback - Upgrades do not have to be undertaken when the payback period can be shown to exceed 7 years.
  • Third party exemption – If third-party consent is required, such as planning permission, and has not been granted despite all reasonable efforts being made.
  • Property devaluation exemption – If a chartered surveyor considers the upgrade to devalue the property by more than 5%.
  • Exemption due to recently becoming a landlord – Temporary 6 month exemption for people suddenly and unexpectedly becoming landlords.
  • Where all reasonable upgrades have been implemented and the building still fails to meet the threshold.

What are the penalties?

If a landlord continues renting out a property in breach of the MEES regulations for a period of fewer than three months they face a fine equivalent to 10% of the property’s rateable value, min £5,000 and a maximum of £50,000. After three months, the penalty rises to 20% of the rateable value, with a minimum penalty of £10,000 and a maximum of £150,000.