Commercial landlords, since 1st April 2018, have been required when granting a new tenancy to ensure that their commercial properties have a minimum Energy Performance Certificate (EPC) rating of an E, under the Minimum Energy Efficiency Standards (MEES) in line with Government aims.
This requirement will now be expanding to cover all existing tenancies from 1st April 2023, making it unlawful for a landlord to continue to let their property with a rating of F or G, unless a valid exemption applies. Some commercial landlords may not be aware of this change, if their leases have been in place prior to 1st April 2018.
What are the exemptions?
Properties with an EPC rating of F or G can continue to be let if an exemption applies and that exemption has been registered on the PRS Exemptions Register.
- A temporary exemption is available to landlords that are acquiring a substandard property which is already let. In this case, the new landlord has six months to carry out all relevant improvements.
- Where the EPC rating remains below E after all relevant energy efficiency improvements have been made.
- Where consent to the works is, by law, required from the tenant and/or another third party and the landlord has been unable to obtain that consent to make the improvements.
- Where an independent surveyor reports that making the relevant improvements would result in a reduction of 5% or more in the market value of the property.
Whilst 1st April 2023 implements the requirement of an EPC rating of E or higher, the government plans for this to continue to increase in the coming years to C by 2027 and B by 2030. It is therefore important for commercial landlords to be aware of these requirements to plan and budget for the necessary improvements over time, rather than having to make large payments in 2027 and 2030 in line with the ratings increases, and also to avoid the potential of committing an offence under the MEES in the future.
To discuss Commercial Property issues, please email us at info@ramsdens.co.uk or call us on 01484 821 500 to speak to a member of our team.