1 April 2018 sees the arrival of the Minimum Energy Efficiency Standard (MEES) Regulations, a welcome step towards improving the energy performance of some of the least energy-efficient properties in England and Wales — those rated F or G on Energy Performance Certificates (EPCs).
Under the regulations, more formally known as The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, it will be unlawful to rent out property — residential and commercial — that does not meet a minimum EPC rating of E unless they have made all possible cost-effective energy-efficiency improvements. Any properties below this rating will be regarded as ‘sub-standard’, and the regulations will be introduced from the following dates.
1 April 2018.
It will be an offence to let a sub-standard property — both commercial and residential. This will apply to lease renewals, lease extensions and overriding leases alike
1 April 2020
It will be an offence to continue to let a sub-standard residential property, including all leases
1 April 2023
It will be an offence to continue to let a sub-standard commercial property, including all leases.
By increasing the energy efficiency of our building stock, the Government aims to increase energy security, while the demand for energy-efficiency measures is expected to support growth and jobs in the green-construction industry and the supply chain for energy-efficiency products.
Research figures from 2014 show that 19% of EPCs in England and Wales are currently rated F or G. The office sector was found to have the highest proportion of sub-standard units, with 23% rated F or G, and 18% rated E. London postcodes represented the highest concentration of these substandard ratings, which was true across all sectors. Financial penalties for non-compliance range from £5,000 to £150,000 per commercial unit, and, in all instances, non-compliance will be published. As such, it is in a property owner’s best interest to adhere to the new regulations.
The building-services sector can expect to benefit widely from the introduction of MEES
The Government has recently published guidance on the steps landlords will have to take to meet the MEES requirements. One area of contention is likely to be the issue of whether a property is exempt because energy-efficiency improvements are not ‘cost effective’. For MEES, ‘cost effective’ broadly means an improvement that offers payback within seven years.
It is likely to lead to a raft of landlords seeking to prove that energy-efficiency improvements identified in a property’s EPC report are not cost-effective. Landlords will need a written report from a ‘relevant person’ to support this or three quotes from ‘relevant installers’ to show that the measures will not pay back in less than seven years.
Nevertheless, the building-services sector can expect to benefit widely from the introduction of MEES. Expect enquiries from concerned landlords and make sure that you can offer a compelling case for investment in energy efficiency measures.