What Are The Minimum EPC Standards For Commercial Properties?
In an era where environmental sustainability takes centre stage, it has become increasingly important for commercial properties to meet energy efficiency standards.
The implementation of Minimum Energy Efficiency Standards (MEES) in 2018 marked a significant milestone in promoting energy efficiency.
At Bennett Griffin, we understand these challenges.
In the following sections, we will explore how Bennett Griffin can help commercial landlords and tenants navigate the world of minimum EPC standards, ensuring compliance and protecting their interests in the commercial property sector.
MEES
The MEES were first introduced in 2018 for the residential sector and has now been extended to commercial properties.
MEES aims to ensure that buildings meet certain energy efficiency requirements, reducing their environmental impact and operational costs.
MEES regulations make granting or renewing leases on commercial properties with an EPC rating below a certain threshold unlawful.
Minimum EPC Standards For Commercial Properties
From 1st April 2023, the prohibition on commercial properties with an EPC rating below an E will now apply to continued/existing leases as well as new leases.
This means that properties, with both new and existing leases, with an EPC rating of F or G will be considered substandard and will not comply with the MEES regulations (unless there is a valid exemption).
The EPC rating is determined by assessing various factors, including insulation, heating systems, lighting, and renewable energy sources. The rating is displayed on a scale from A (most energy-efficient) to G (least energy-efficient). These minimum standards aim to reduce carbon emissions, promote sustainability, and lower operational costs for commercial properties.
Landlords and property owners are responsible for ensuring their properties meet these minimum standards
Who Do These Changes Impact?
The changes in minimum EPC standards for commercial properties impact both landlords and tenants.
Let’s take a closer look at how each party is affected:
Commercial Landlords
Landlords are responsible for ensuring that their properties meet the minimum EPC standards. Failure to comply with these standards can result in financial penalties.
Landlords must take proactive measures to improve the energy efficiency of their buildings, such as implementing energy-saving upgrades and optimising the property’s systems.
By meeting the minimum EPC standards, landlords can avoid legal consequences (more on this below) and enhance the marketability and desirability of their properties.
Commercial Tenants
Tenants also play a crucial role in these changes.
When considering renting a commercial property, tenants can request information about the property’s EPC rating. This enables them to make informed decisions regarding energy efficiency and factor it into their occupancy costs.
Tenants prioritising sustainability may seek properties with higher EPC ratings, as they provide potential energy savings and align with their environmental goals.
Understanding the EPC rating can help tenants assess the overall energy efficiency of a property and make more informed choices when selecting their commercial space.
Tenants should be aware that a Landlord may have a right to enter the property to carry out energy improvement works.
If a Tenant has proposed alterations or fit-out works, it is likely that proposed alterations will be scrutinised by landlords to ensure they don’t have an adverse impact on the EPC rating of the Property
Possible Exclusions
While the minimum EPC standards apply to most commercial properties, some exclusions exist.
Certain buildings, such as those with temporary structures or scheduled for demolition, are exempt from the regulations.
However, consulting with legal and property experts is essential to determine if your property falls under any of the exclusion categories.
Further Planned EPC Changes For Commercial Properties
The UK government has set ambitious targets to reduce carbon emissions and achieve a Net Zero target by 2050.
Further changes to Energy Performance Certificate (EPC) regulations for commercial properties are anticipated as part of these efforts.
These changes are expected to improve the existing Minimum Energy Efficiency Standards (MEES). They may include stricter minimum EPC rating thresholds and additional obligations for commercial properties.
These proposed changes, if implemented, will have significant implications for landlords and tenants.
The following timeline has been suggested:
- By 1st April 2025: Landlords must submit a valid EPC for every let property to a Private Rented Sector (PRS) compliance and exemption database.
- By 1st April 2027: Landlords will face new requirements. Unless an existing EPC is rated as band C or above, landlords must obtain a new EPC to demonstrate that they have improved the building to at least band C. Alternatively, they can show that the property has achieved the highest EPC rating possible, considering cost-effective measures. Landlords will need to register an exemption if they cannot meet these criteria.
- By 1st April 2028: Landlords will be obligated to submit another valid EPC to the PRS database.
- By 1st April 2030: Further changes will come into effect. Unless an existing EPC is rated as band B or above, landlords must obtain a new EPC to demonstrate that they have improved the building to at least band B. Alternatively, they can show that the property has achieved the highest EPC rating possible, considering cost-effective measures. Landlords will need to register an exemption if they cannot meet these requirements.
These proposed changes reflect the government’s commitment to enhancing energy efficiency in commercial properties and moving towards a more sustainable future.
Landlords and tenants should stay informed about these potential developments, as they will impact compliance obligations and influence decision-making regarding energy-efficient measures in commercial properties.
How Can Bennett Griffin Help Commercial Landlords and Tenants?
At Bennett Griffin, we understand the challenges commercial landlords and tenants face in complying with EPC and MEES regulations.
Our team of commercial property solicitors is dedicated to providing tailored legal assistance to meet your specific needs.
Here’s how we can help:
For Commercial Landlords
Compliance Assessment: Our experienced solicitors can assess your commercial property’s current energy efficiency and EPC rating to determine if it meets the minimum standards required by MEES regulations.
Legal Advice: We offer expert advice on the legal obligations and requirements related to EPC and MEES regulations. We can guide you through the process of ensuring compliance and help you understand your responsibilities as a landlord.
For Commercial Tenants
Lease Review
Our solicitors can review your lease agreement to ensure that it includes provisions related to EPC ratings and compliance with energy efficiency regulations. We can help you understand your rights and obligations as a tenant regarding EPC requirements.
Due Diligence
Before entering into a lease agreement, we can conduct due diligence on the property’s EPC rating and energy efficiency to ensure you are making an informed decision. We can request and review the property’s EPC certificate and provide advice based on its findings.
Negotiations
If you have concerns about the energy efficiency of a property you are considering, we can assist in negotiating with the landlord to address any necessary improvements or energy-saving measures before finalising the lease.
Dispute Resolution
In the event of disputes related to EPC ratings or compliance, our solicitors can provide legal representation and guidance to protect your rights and interests. We can help resolve conflicts and reach favourable outcomes through negotiation or, if necessary, through legal proceedings.
At Bennett Griffin, we are committed to providing exceptional legal services and practical solutions to commercial landlords and tenants.
Our expertise in EPC and MEES regulations allows us to assist our clients in navigating the complexities of energy efficiency requirements, ensuring compliance, and protecting their interests in the commercial property sector.
Contact our team today to see how we can help.