Energy efficiency requirements for commercial landlords – meeting your obligations
There’s a lot of noise out there about minimum energy efficiency standards (MEES) and how commercial and residential landlords will have to comply with them as of April this year. You might be wondering what that means for you. So we thought now would be a good time to talk you through it.
First, let’s clarify — MEES regulations apply only in England. Also known as Regulation 27, MEES will affect all commercial landlords under The Energy Efficiency (Private Rented Property) England and Wales Regulations 2015.
They’re tied to the energy ratings of your property, as shown on your Energy Performance Certificate (EPC). You’ll have to achieve a band E or above, or you’ll no longer be able to issue or renew leases without making improvements.
If you’re in the middle of a sale or purchase when the regulations come into force, you’ll still be able to complete it. But you — or the new owner — won’t be able to let the property until it’s brought up to standard.
Penalties for non-compliance can be harsh. If you rent out properties below Grade E after 1 April, you could be looking at fines up to £150,000, depending on the type of property you’re letting and its rateable value.
If you provide wrong or misleading information about your property’s grade, you could be fined up to another £5,000. So if you’re renting non-residential property south of the border after April 1, it’s essential that you understand MEES regulations and make sure your premises comply with them.
What do you need to do?
The first thing you need to check is your current EPC rating. You should have a copy displayed in your building, but if you don’t you can find it on the EPC register at epcregister.com. If your property falls below Grade E, you’ll need to make improvements to bring it up to standard.
To find out more about the improvements you’ll need, or (if you’ve already made improvements) to have another EPC assessment carried out, contact any reputable energy management firm. Assessments can often be carried out and registered within a few days.
Finding out more about MEES
The UK Government has produced a useful guide to MEES regulations and the responsibilities they place on you as a commercial landlord. Alternatively, your EPC assessor will be able to tell you how to find out more.
Energy efficiency regulations in Scotland — Section 63
In Scotland, legislation governing the energy efficiency standards required in commercial properties are already in force.
It’s known as Section 63 legislation, as it falls under Section 63 of the Climate Change (Scotland) Act 2009 — The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016. There are some exceptions to it, for example buildings that meet energy standards equivalent to 2002 building regulations, or that have been improved through the Green Deal. As a guideline, it governs the energy efficiency of commercial properties over 1,000 sqm and comes into effect when the property is about to be sold or let.
How it works
Section 63, like MEES, relates to your EPC rating. In Scotland, commercial landlords have to commission an EPC before, or within seven days, or putting a property on the sale or lease market. Once completed, an EPC is valid for ten years, so there may already be one in place for your property.
If there is, it should be displayed somewhere in the building. If you’re not sure, you can check the Scottish EPC register. If there’s a certificate for your building, you should be able to find it there.
If you don’t already have an EPC, or if you’ve carried out energy efficiency improvements to the property since the last one was commissioned, you’ll need to appoint an EPC assessor. The process can usually be completed well within the required deadlines.
How it differs from MEES regulations
Unlike MEES regulations in England, Section 63 doesn’t prevent commercial property owners from selling or leasing their properties if they fall below a specific standard. It does, however, require that an action plan to improve energy efficiency is created and registered. As long as that’s the case, the sale or lease can go ahead as planned.
You — or the new owner of the property — have three and a half years to implement the action plan, or to defer it by showing a Display Energy Certificate (DEC). That just means that you demonstrate an ongoing increase in efficiency and decrease in emissions, without putting into place all the measures described in the plan.
Penalties for non-compliance
While not as harsh as potential penalties in England, every failure to comply with Section 63 legislation is subject to a fine of £1,000.
Ask an expert
If you’re in any doubt about the responsibilities placed on you by law, we strongly suggest you ask an expert for further advice. Consultation and commission costs vary, but unless you make that investment, you’re potentially open to damaging fines. And that’s something all businesses would rather avoid.
Raj Chall is a commercial energy assessor and Section 63 adviser with Scottish Energy Services. Based in Glasgow, the company works with domestic and commercial clients across Scotland.