With the Minimum Energy Efficiency Standard (MEES) for commercial property coming into effect on 1 April 2018, head of Nottingham building consultancy at Bruton Knowles, Tom Burton warns landlords that they should be wary to avoid wider losses.
THE MEES means that it will no longer be possible for landlords to grant a new lease to a new tenant, or renew a lease, unless the Energy Performance Certificate (EPC) has a minimum rating of E.
This standard will apply for existing leases from 2023 and a significant proportion of building stock will be affected by these regulations.
Landlords need to be reviewing their asset schedules to identify the properties with an EPC rating of F or G and once these properties have been identified, a re-run of the EPC should be undertaken. The existing EPC may not take into account any improvements made to the property or default values and inappropriate assumptions that were made in the original assessment and modelling process.
Potentially re-running the EPC process could bring the property up to an E rating, without having to commit to capital expenditure.
Where the undertaking of a new EPC assessment could result in an unsatisfactory outcome, early identification of measures needed to achieve the minimum E rating will be vital to allow timely attendance and justification of an otherwise potentially costly period of attendance, with associated wider losses then likely to be incurred.
In order to further ease potential losses, consideration should also be given to attending works during the course of an existing occupier’s lease, where such provision for doing so might be afforded within the terms of that lease. This would, however, require careful planning and a lawful and appropriate approach, to protect the landlord’s position.
The position on these matters, from a dilapidations perspective, is not fully known, but is likely to become apparent in the fullness of time, after the enforcement of the legislation. Whilst a number of mitigating factors might exist to protect tenants, those occupying property on full repairing terms, may find themselves in a difficult position and could possibly bear liability for improvements to energy performance, under this legislation.
Although predominantly concerning landlords, the proposed enforcement of this legislation will have implications for both landlords and tenants, requiring much consideration of the relative positions of all parties, when considering letting or continuing to let commercial property stock.
