While the number of properties with Energy Performance Certificate (EPC) ratings of F or G has fallen from around 700,000 in 2012 to 300,000 today, there are still many landlords in danger of falling foul of the new legislation. Although there are only a few weeks to go until the new MEES legislation kicks in, landlords that act quickly could still become compliant in time for 1st April.
What’s going to change?
Under the new legislation, from 1st April 2018 any property that has an EPC of lower than an ‘E’ cannot be rented out to new tenants, or renew any existing tenancy contracts until they obtain at least an ‘E’ rating.
Landlords that do not comply with these regulations face significant penalties. If they continue to let a property in breach of MEES for up to three months, they will face a fine of 10% of the property’s rateable value, up to a maximum of £50,000. Letting out a non-compliant property for longer than three months will result in a fine of 20% of the property’s rateable value, which is capped at £150,000 – so clearly, it pays to be compliant.
In April 2023, MEES will become even tougher – from this point, landlords will not be able to continue to let non-domestic properties that have EPC ratings of ‘F’ or ‘G’, even in the case of existing contracts.
What will be expected of landlords affected by MEES?
If you’re a landlord, property manager, or agent of a commercial property, you will need to check whether MEES applies to your property. MEES doesn’t apply to all landlords or commercial properties – there’s a temporary exemption of six months for new landlords, for example, and a property can be exempted if it is found that efficiency measures would decrease the property’s value by 5% or more.
There’s also a seven-year payback test, meaning that you will only be required to make energy efficiency improvements that have an expected payback of seven years or less. So, if the predicted energy savings over a seven-year period are greater than or equivalent to the cost of repayment, the measures will meet the seven-year test and will need to be installed.
However, many measures are likely to meet the payback test. Lighting retrofit programmes, for example, or building control systems, can typically deliver savings well within the seven-year timeframe. This is good news for landlords, as it means that any measures they implement as a result of the MEES legislation should provide sufficient energy savings to prove worthwhile.
Commercial landlords must ensure that they have a valid EPC in place, and that their EPC is at least an ‘E’ rating if they want to avoid substantial penalties.
Clearly, if you have an EPC rating of F or G, you will need to take immediate action to improve your rating as soon as possible. It’s a good idea to put an energy efficiency plan in place, but this doesn’t need to be complicated or expensive. Making small changes, such as replacing traditional lighting to LED lighting, can make a big difference to the efficiency of a building. When assessing the affordability of any efficiency measure, you should also think about the energy savings you could make as a result.
We know that it can be difficult to know where to begin when it comes to creating and implementing an energy efficiency plan, and with the MEES deadline looming it’s important that landlords are prepared. Our industry experts can work with you to ensure that your properties are compliant and improve your energy efficiency now and into the future – talk to the team today by calling 08451 46 36 26 or email email@example.com.