There's now less than three months to go until the minimum energy efficiency standard (or MEES) comes into force for commercial properties.
Last October an article in Property Week suggested that 43% of landlords were yet to assess what proportion of their portfolios will be hit by MEES. Our experience suggests that the commercial property market has become much more focused on MEES in recent months. But as these are new regulations, it's still unclear how far the minimum energy standard will affect property values and transactions.
MEES – a quick recap
From 1 April this year, it will be unlawful for a landlord to grant a new lease of a property with an EPC rating of F or G, unless an exemption applies or the property is excluded from MEES altogether. The prohibition also covers renewal leases and subleases. Click here for our client guide, which sets out the rules for commercial properties in more detail.
Exemptions register now available
If you are a landlord and want to rely on an exemption (so you can still grant a lease of an F or G property after 31 March), the online public exemptions register is now available as a pilot. Confusingly, the register uses the terms "private rented property" and "PRS" to mean both commercial and residential properties in this context.
Key exemptions include (a) where improvements would not be cost effective and (b) a necessary consent cannot be obtained. For full details of the available exemptions, please see our client guide.
You can register your exemption now, although you are not obliged to do so until 1 April 2018. The period of five years (or six months for a temporary exemption) will start running from the date the exemption is registered.
Tougher standards on the horizon?
In October last year, the Government published its "Clean Growth Strategy" which confirmed,at least on paper, its commitment to reducing carbon emissions.
The strategy provides for a consultation this year on "setting longer term energy performance standards". This will include, in the medium term, raising the minimum energy standard above grade E and perhaps ultimately to grade C. Therefore the best course of action for landlords when doing energy improvement works is still to achieve the highest energy rating their budget will allow.
We are presenting a client seminar on MEES in early March. Please email Britney Sullivan (Britney.sullivan@mishcon.com) if you would like to attend or would like more information.