Further to our Energy Insight Report published on the 27th April 2017 (https://beondgroup.com/be-informed/minimum-energy-efficiency-standard-april-2018/) we are releasing an updated Insight Report to ensure energy consumers are prepared for the forthcoming Minimum Energy Efficiency Standards which commence in April 2018.
The Minimum Energy Efficiency Standard (MEES) was introduced in 2015 and enforces a minimum energy efficiency standard for non-domestic (private and public sector) and domestic properties which are leased – based on the underlying requirement for an Energy Performance Certificate (EPC). Our report considers the non-domestic sector only.
For properties in England and Wales (separate legislation exists in Scotland) that are required to hold an Energy Performance Certificate (EPC – see below), the regulations contain provisions for a minimum energy performance rating of E. This means that any properties which currently or are anticipated to hold an F or G EPC rating will be required to install energy efficiency improvements or consider whether any exemptions exist.
Subject to certain requirements and exemptions, the following dates are applicable:
All property not meeting the minimum standards as set out above will be classified as ‘sub-standard property’ and all enforcement will be managed by the Local Weights and Measures Authority.
It is important to note that MEES is aimed at landlords (both private and public sector) and it is the responsibility of each landlord to ensure that the property meets the requirements or is exempt from the legislation (see below). For those organisations currently leasing or looking to lease property, due attention should be placed on any obligations within existing or proposed tenancy agreements for any pass-through of cost or obligation.
The regulations will not cover:
Currently the legislation covers all non-domestic and domestic properties which are legally required to hold an Energy Performance Certificate.
An EPC is only required where a building is constructed, sold or leased. For the purposes of clarity, the definition of a building is one which has a roof, walls and uses energy to condition the indoor climate (heating, mechanical ventilation or air-conditioning).
Where a building falls into one of these categories it is required to obtain an EPC certificate showing the energy efficiency of the building together with a report detailing observations to improve the rating.
An EPC certificate is valid for 10 years or until a newer EPC is produced and advice should be taken on the requirement for an EPC based on current guidelines. Various exemptions exist which can be advised upon by Beond, although current legislation dictates that stand-alone buildings with a total useful floor area of less than 50m2 do not require an EPC. Our expert compliance team can work with you to determine whether your portfolio is exempt from EPCs and MEES.
Currently the following scenarios are an interpretation of the MEES legislation:
Stage 1 (April 2018):
Stage 2 (April 2023):
There are four scenarios determined within the BEIS guidance document which helps to further illustrate the interlinkage between an EPC and MEES.
A landlord intends to let a property on a new lease from April 2018: If the property already has an EPC which is less than 10 years old then this EPC can be used to let the property. If the EPC is more than 10 years old, or if there is no EPC, then the landlord will be required to obtain a new EPC to market and let the property. If that EPC shows an energy efficiency rating of F or G then the landlord will need to carry out sufficient energy efficiency improvement works to improve the property to a minimum of E (or register a valid exemption if applicable) before issuing a tenancy agreement.
A property let on a 10-year lease with an F rated EPC obtained, as legally required, in 2015: On 1 April 2023 the landlord is continuing to let the property and will have to comply with the minimum energy efficiency provisions because there is a valid EPC which the landlord was required to obtain (the EPC will continue to be valid until 2025).
A property let on a 20-year lease with an F rated EPC obtained in 2012: On 1 April 2023 the landlord is continuing to let the property but, in this scenario, will not be captured by the minimum energy efficiency provisions because the EPC expired in 2022, and there is no legal requirement on the landlord to obtain a new one at that point (because the tenancy is ongoing). The landlord will only be required to obtain a new EPC (which will trigger a need to comply with the minimum energy efficiency provisions) if they intend to re-let the property (to the current tenant, or to a new tenant) once the current lease expires, or if they (or their tenant) modify the property in a manner which would require a new EPC.
Based on scenario three, if the tenant in 2025 wishes to sublet the property, the tenant (who will become a sub-landlord) will be required to obtain an EPC to market the property. If this EPC shows an F or a G rating then the landlord will need to comply with the minimum energy efficiency provisions because the property now has a valid, legally required, EPC.
While the obligation to comply or exempt property under MEES is to be enforced to the property owner there is still considerable risk to both parties based on:
Beond has significant expertise in: