Energy Efficiency Standards To Become Problem For Landlords?

From 1 April 2018 the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (“MEES Regulations”) made it unlawful for landlords to enter into new leases of non-domestic property with an energy performance certificate (“EPC”) rating of E or F.

From the outset the government made it clear that the intention over time was to increase the minimum rating from E and it has just announced further steps towards achieving this in the form of a Department of Business, Energy and Industrial Strategy consultation seeking views on how best to amend the MEES Regulations to improve the energy performance of non-domestic private rented (PR) properties.

The consultation seeks views on the implementation of a minimum energy efficiency standard for non-domestic PR property of EPC B rating by 2030.

To put this in context, when the regulations were first introduced in 2018 it was estimated that 18% of commercial property had an EPC rating of F or G. More significantly though, it was estimated that there were a further 47% of properties which were D or E rated. This gives some idea of the scale of the potential issues now facing landlords.

To compound this, with effect from 1 April 2023 it will become unlawful for landlords to continue to let commercial property which is below the minimum rating and although this is still some way off, landlords of sub-standard commercial property should now be starting to consider and plan for this, particularly in the light of the likely trajectory of the minimum rating.

The current consultation also seeks views on improving the implementation and enforcement of the MEES Regulations which, to date, have been conspicuous by their complete absence and therefore we may also find the regime has more teeth going forward. Another potentially significant issue for landlords, given that the maximum penalty for breach of the regulations is £150,000.

The consultation closes on 9 June 2021. We will be monitoring the outcome and will report further in due course.