Elmhurst urges government to broaden energy efficiency efforts to include the non-domestic sector
The Minimum Energy Efficiency Standards (MEES) are a crucial component in improving the energy efficiency of buildings across England and Wales. While the new Labour Government has promised to reinstate MEES for the domestic sector, progress in the non-domestic (commercial) sector appears to have stalled.
It is important for landlords, property owners and non-domestic energy assessors to understand the current regulations in place and be aware of any potential future changes.
What are MEES regulations?
The Minimum Energy Efficiency Standard (MEES) regulations establish a minimum Energy Performance Certificate (EPC) rating for non-domestic (commercial) properties in England and Wales. The regulations were first introduced under the Energy Act 2011 and have been enforced since 2018.
Under the current regulations, any non-domestic property being leased (including new and existing leases) must meet a minimum EPC rating of E or above.
All non-domestic landlords are required to comply with the regulations, unless an exemption is registered on the Private Rented Sector (PRS) Exemptions Register. If a situation of non-compliance occurs, the landlord may face financial penalties.
Why are MEES regulations important?
Non-domestic buildings account for a substantial portion of the UK’s energy consumption and carbon emissions. The MEES regulations play a crucial role in addressing this by encouraging energy efficiency upgrades.
By setting minimum energy efficiency standards, the MEES regulations encourage landlords and property owners to upgrade their non-domestic properties to be more energy efficient, such as through the installation of insulation.
These upgrades will not only benefit the environment and the economy, but are also likely to increase the value of the property.
Key provisions of the current non-domestic MEES regulations
It is important for landlords and property owners to stay informed about MEES regulations and take proactive steps to ensure compliance and avoid penalties.
Timeline:
From 1st April 2018, all new leases and lease renewals for non-domestic properties must have an EPC rating of an E or above. This requirement also applies to lease extensions and sub-leases.
From 1st April 2023, the regulations expanded to cover all existing leases. This means that all non-domestic properties that are currently being rented out must have an EPC rating of E or above. Landlords who have not already upgraded their properties to meet these standards may face penalties if they continue to lease substandard properties.
Exemptions:
There are a number of exemptions in place where landlords may not be required to meet the minimum EPC rating. These include (but are not limited to):
- Property Devaluation: Applies if an independent surveyor determines that making the required improvements would reduce the property’s value by more than 5%.
- All Improvements Made: Applies if all the relevant energy efficiency improvements for the property have been made (or if none can be made) and the property remains sub-standard.
- New Landlord Exemption: Applies where the landlord has recently acquired the property and needs time to comply. This applies under certain circumstances and you may only be exempt for a short period.
Landlords must register all exemptions on the Private Rented Sector (PRS) Exemptions Register to avoid penalties. You can access this on the government website, available on the following link: https://prsregister.beis.gov.uk
To apply for an exemption, landlords need to complete the online form and provide all required details, including the property address, EPC rating, and the type of exemption required. Landlords will also need to upload the evidence gathered to support the exemption claim.
More information on MEES guidelines can be found on the government website, available on the following link: https://www.gov.uk/guidance/non-domestic-private-rented-property-minimum-energy-efficiency-standard-landlord-guidance
Enforcement and Penalties:
Local authorities are responsible for enforcing the MEES regulations. Penalties for non-compliance can be severe, including fines up to £150,000, depending on the length of the breach and the property’s rateable value.
Future Developments:
The UK government has signalled its intent to tighten MEES regulations further in the coming years, as part of the UK’s commitment to reducing carbon emissions to net-zero by 2050.
In 2021, the government launched a consultation, titled Non-domestic Private Rented Sector minimum energy efficiency standards: EPC B implementation. This consultation proposed to raise the minimum EPC rating for non-domestic properties from an E to a B. The consultation closed for public comment in June 2022 and we are now awaiting a response from the government.
You can view the consultation by clicking the following link: https://www.gov.uk/government/consultations/non-domestic-private-rented-sector-minimum-energy-efficiency-standards-epc-b-implementation
Elmhurst Thoughts
Elmhurst’s Head of Operations, Sam Cantle, comments:
“In recent months, the new Labour Government has made progress in bringing the Net Zero target back to the forefront of the public agenda. Most notably, the Labour Manifesto introduced the ‘Warm Homes Plan’, pledging to invest an extra £6.6 billion during the next parliament to upgrade an estimated 5 million homes. The Labour government has also committed to reversing the recent loosening of domestic MEES, promising to ensure that domestic properties in the PRS meet MEES by 2030.
However, what remains absent is a similarly strong focus on the non-domestic sector. It’s important to highlight that around three quarters of non-domestic properties currently have an EPC rating below a B, falling short of the minimum rating proposed for 2030 in the non-domestic MEES consultation.
Elmhurst call upon the Labour Government to extend its recent drive on energy efficiency in the domestic sector to also address the Non-Domestic sector, which continues to play a significant role in the UK’s climate emissions.”
Further Resources:
Government Non-Domestic MEES Landlord Guidance: https://www.gov.uk/guidance/non-domestic-private-rented-property-minimum-energy-efficiency-standard-landlord-guidance
Non-Domestic MEES Consultation for EPC B Implementation: https://www.gov.uk/government/consultations/non-domestic-private-rented-sector-minimum-energy-efficiency-standards-epc-b-implementation
Register An Exemption: https://prsregister.beis.gov.uk
Elmhurst Non-Domestic MEES Page: https://www.elmhurstenergy.co.uk/non-domestic-mees-for-landlords/