The UK is in the midst of some ground shifting energy efficiency regulations that will impact both the commercial and residential property markets. From April 2018 the government will be rolling out MEES (Minimum Energy Efficiency Standards) for England & Wales which means all property, be it a business or a home, must score an E or higher on the EPC (Energy Performance Certificate) survey if it is advertised for lease/rent.
What’s The Purpose?
The intention of MEES is to help improve the energy efficiency of the UK’s building stock which are among the oldest and most inefficient in Europe and meet future deadlines for reduced carbon targets. The owners of property that score F & G on an EPC will need to implement the recommendations from their survey report. This will get them the improved score that will allow them to legally agree a new lease with a tenant. On average, this will cost more for commercial owners than residential owners. From April 2023 the law will extend to all existing lease agreements regardless of whether it has been advertised for lease/rent. There are however some exemptions from MEES such as listed buildings, leases under 6 months and unique situations where a property’s value could decrease by 5% or more if recommended improvements were added.
What’s the Penalty?
It is estimated that approx. 20% of commercial properties are currently in the F & G bracket and in need of improvement. EPC London or EPC Glasgow can tell you your current rating. In their current status the potential for decreasing valuations and requested rent reviews are very real for those who own the least energy efficient property and investment is needed otherwise the penalties for failure to address the problem could be upwards of £150,000 per occasion.
Getting an approved and professional assessor to conduct a commercial EPC or residential EPC survey to ascertain the accurate EPC score for a building is important to make sure landlords aren’t penalised unfairly through a poor survey. The costs involved in getting the improvements, which are unique to each property type and listed on the EPC, can range from the low price scale of replacing all lighting with low energy bulbs or introducing a heating control to high end of wholesale heating system changes and retrofitted renewables.
Different laws for Scottish landlords
In Scotland the law is different and MEES doesn’t apply. For commercial / non domestic property over 1000m2 they must obtain a Section 63 report along with their EPC and this report will assign either a pass or fail which is dependent on if the building meets Scottish building standards. If it is a fail then there will be an action plan created of which must be acted on within a set time line or alternatively a DEC (Display Energy Certificate) must be instructed annually which involves gathering and rating energy usage.
Residential landlords in Scotland are currently unaffected although the Scottish government is in consultation on introducing a minimum standard for the private rented sector in 2019. This may also become more stringent in following years with a higher rating being required.
Nexus Energy Solutions are an established energy efficiency company who provide our clients with expert surveys and advice for their property through out the UK. Be it in the private rental sector, social housing sector or commercial market we have experience in all aspects of helping to navigate energy legislation successfully. If you need advice on any of the above please contact us for a free consultation.