The A to E of MEES for Leases
28 Jan 2022
Since 1 April 2018, a landlord has been prohibited from granting new leases of commercial premises where the premises to be let do not have a minimum energy performance rating of ‘E’. However, as of 1 April 2023 the MEES regulations will extend further and a landlord will be prohibited from legally letting or from continuing to let a commercial property which has an energy performance rating of less than ‘E’. This means that existing commercial leases will also be caught by the MEES regulations.
Implications on landlords
Whilst the MEES Regulations do not actually impose a positive obligation on landlords to carry out energy efficiency works to sub-standard commercial properties (i.e. those with an energy performance rating of less than ‘E’), landlords who grant a new lease or wish to continue letting a sub-standard commercial property from 1 April 2023, could face enforcement action, which could include significant fines as well as public exposure of the non-compliance (which could be deeply damaging to a landlord’s reputation and brand).
It may however come as a relief to landlords that if they have carried out all the necessary energy efficiency improvements to the property (or where none can be made) and the property remains lower than an ‘E’ rating, or an exemption applies, they can continue to let such property lawfully and without enforcement action being taken – subject to properly recording details of the appropriate exemption on the PRS Exemptions Register.
The future of energy efficiency
In its consultations of October 2019 and March 2021, the government suggested that by 1 April 2030 it aims to reduce the minimum energy performance rating requirement to ‘B’ for all commercial properties. This comes along with a plethora of other recommendations, including taking breaches of the MEES Regulations more seriously through implementing more stringent enforcement measures.
The message to landlords is clear- there will be a continuing drive to make properties more and more energy efficient and non-compliance of the MEES Regulations is likely to be costly, both financially and from a reputational perspective.
For more information please contact Anjali Derashri or Mina Kakkad on 020 8872 3010