Changes to the MEES Regulations for Commercial Property on 1st April 2023
If you are a landlord of commercial property an important deadline is fast approaching. Under the MEES Regulations, as from 1st April 2023, if your property has an Energy Performance Certificate (EPC) rating of F or G it will be unlawful to continue to let it and unless you take action now, you will face the risk of enforcement action and fines of up to £150,000.
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (SI 2015/962), Part 3 (MEES Regulations) provides that a landlord must not grant new leases of commercial property on or after 1 April 2018 or continue existing leases of commercial property on or after 1 April 2023, where that property falls below a minimum energy efficient standard, in certain circumstances.
If a landlord chooses to let a property or continue an existing letting without improving it so that it is no longer ‘sub-standard’ and does not have a legitimate reason for failing to make the necessary improvements, it will run the risk of enforcement action, including public exposure of its unjustified failure to comply with the MEES Regulations and a fine of up to £150,000 depending on the type of property and length of the breach.
MEES will apply where:
- The property is ‘sub-standard’. MEES is measured by the EPC rating of a property. Where the property (or building of which it forms part) has a valid EPC with a rating of F or G it is ‘sub-standard’ for the purposes of MEES, and this will affect the ability to grant new leases or continue existing ones. It is important to bear in mind that it is intended that the baseline of an E rating is expected to be reviewed upwards in future years, and so more properties are likely to be caught by MEES.
- The property falls within the definition of ‘non-domestic private rented property’ which means it is:
- Situated in England and Wales
- Let under a qualifying tenancy (exception is short or very long tenancies)
- Not a dwelling
- Required to have an EPC
What does MEES Regulations Prohibit
Part 3 prohibits, without a legitimate reason, continuing to let a property on a qualifying tenancy after the 1 April 2023. ‘Legitimate reasons’ are that all relevant energy efficient improvements for the property have been made (or there are none that can be made) and the property remains sub-standard, or an exemption in Chapter 4 of Part 3 applies. Landlords must enter exemptions on the Private Rented Section (PRS) Exemptions Register to avoid enforcement action.
Considerations for now
In essence you need to consider the following points to establish what action you should be taking:
- Does MEES apply to your property, and if so do you need to do anything.
- If MEES does apply, you must have either (a) have carried out energy efficient improvements or (b) registered the prescribed information on the PRS register to avoid enforcement action because of an exemption or other legitimate reason.
In our next MEES article, we will look at the exemptions available under the Regulations; and enforcement.