The MEES Regulations and the Impact on Commercial Premises

Do the MEES Regulations apply to your commercial premises?

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (SI 2015/962) (MEES Regulations) apply to commercial properties which are let in England and Wales.

The aim of the MEES Regulations are to improve the energy efficiency of commercial premises. It uses the Energy Performance Certificate (EPC) rating to determine what is acceptable and the current position is that properties must have a valid EPC rating of E or better. The effect of which is that a landlord cannot grant a new lease over a property which does not met the above standard and from 1 April 2023 this will be extended to properties where there is an existing lease.

The Regulations apply to any commercial property which is:

• situated in England or Wales
• let under a qualifying tenancy
• not a dwelling
• required to have an EPC.

The Standard

Any property which meets the above criterion will be subject to the Regulations and will be considered ‘sub-standard’ if they hold an energy rating of F or G. If this is the case the landlord will need to carry out works to improve which result in an acceptable energy rating unless:

• all relevant energy improving works have been carried out but the property remains sub-standard
• an exemption applies.

All relevant energy improving works

As noted above this is where all the necessary improvements to raise the rating have been implemented to no avail. In these circumstances the landlord will have to register the details on the PRS Exemptions Register. If approved the landlord will have a five year period where they can continue to let the property despite the unimproved rating.

Exemptions

In brief the exemptions are:

• Consent exemption – The landlord will need to prove that in the preceding five years an improved energy rating has not been possible due to one or more of the prescribed situations. In summary, the prescribed situations are where the tenant or another relevant third party has refused consent to the energy efficiency improvement or Green Deal confirmation. Therefore, it is important that leases are drafted to give the landlord a right to carry out such improvements.
• Devaluation exemption – The landlord will need to obtain an independent report from a surveyor confirming that the energy efficiency improvements would result in a reduction of more than 5% of the market value of the property.
• Temporary exemption – This exemption gives a six month period where enforcement action will not be brought to allow the landlord to either complete improvements works or to assess the necessary requirements and then apply for one of the other exemptions.

There are a number of requirements and procedures which must be met and followed to ensure the above exemptions can be relied upon, including that the details must be registered on the PRS Exemptions Register prior to relying on the exemption.

Enforcement

The Local Weight and Measures Authority (LWMA) will be responsible for enforcing the Regulations and will issue a compliance notice if they believe a landlord is letting a sub-standard property. The compliance notice will contain a number of conditions which will need to be complied with within a specified time period. If this notice is breached a prohibition notice will be issued. The prohibition notice can contain financial penalties which are capped at £150,000.

In addition to the above potential hefty financial implications, the Government has indicated an intention to review the present position under the Regulations. Therefore it is essential that the landlord seeks legal advice when granting a lease to ensure they are aware of their obligations and so that the lease includes the necessary rights and restrictions.