What do the New MEES Regulations mean for Landlords?

The new Minimum Energy Efficiency Standard has come into full effect this year. But what does it mean for commercial Landlords?

The new and revised MEES has created a bit of a hysteria within the commercial property sector over the last few months, with many landlords left guessing as to how it could effect them. So, to set the record straight we’ve listed a few significant changes in the new regulations and how they could affect commercial Landlords.

Regulation

In the good old days a property could be let if its Energy Performance Certificate read higher than a G rating. The new MEES regulation states that in order for a property to be certified legally fit for market, then it has to have a reading over the E grade.

Penalties

Failure to comply with the new regulations could result in some fairly considerable penalties and fees for Landlords. The breach time, size of the property and its market value, are three factors that will effect how much a Landlord will pay if they fail to comply and continue to let a property that is performing below the stipulated grade.

A property that is found to be in breach of the MEES regulation to an unlawful standard after three months of the notice being served, could face a fine of up to 20% of the properties relatable market value with a maximum penalty of £150,000.

A property in moderate breach of MEES for up to 3 months=10% of the relatable property value. With a maximum fine of £50,000.

Exemptions

There are a few stipulations in the new regulations that can exempt Landlords and properties from fully complying with MEES. It is important to note that any exemptions do not pass over if a property is sold. The new owner will have to submit an exemption form and seek approval.

Third-party consent:

In certain circumstances a Landlord will be required to seek approval from other parties i.e. current tenants or local land/building authorities if improving the EPC requires significant development. The Landlord will then be required to prove to the necessary authorities that they have made ‘reasonable effort’ to seek consent.

Devaluation

If a Landlord consults an objective surveyor and that surveyor contests that improving the EPC will lower the market value of the property, then the property will be exempt from complying with MEES for up to 5 years.

Unexpected or sudden responsibilities

In certain circumstances, if an individual is forcefully obliged to take on the position/responsibilities of the Landlord then they wouldn’t be expected to comply with MEES straight away. Circumstances include:

• A situation where a contract was entered into on a contingent basis,
  regardless of whether it was entered into before or after the Regulations
  came into force)
• Where the tenant becomes insolvent and the landlord has been the tenant’s
  guarantor (in this situation, the tenant’s guarantor becomes a landlord when
  taking over the lease)
• The landlord has been a guarantor, or a former tenant, who has exercised
  the right to obtain an overriding lease of a property under section 19 of the
  Landlord and Tenant (Covenants) Act 1995 (for the avoidance of doubt, a
  “guarantor” who exercises this right under the 1995 Act is the guarantor of a
  former tenant)
• A new lease has been deemed created by operation of law

For more information visit the official Regulation Guidlines here.

The most effective way of reading and improving a sub-standard EPC is through consulting with an expert surveyor. At Vantage we have a track record in improving EPC’s on behalf of Landlords and would be happy to help in assuring a necessary exemption.   Get in touch…we’re here to help!