1 April 2023 sees the final step within the MEES section 1 journey come to fruition – which means that (with restricted exceptions) you can not proceed to let sub-standard property (that has an EPC score beneath an E) with out registering an exemption. Failure to conform could lead to adversarial publicity and a fantastic of as much as £150,000. On this article we take a look at this in additional element and contemplate what section 2 could seem like because the Authorities tries to map a viable route for industrial property’s journey to web zero.
WHAT ARE MEES?
Minimal Vitality Effectivity Requirements (MAN) have been introduced into pressure (pursuant to the Vitality Effectivity (Non-public Rented Property) (England & Wales) Rules 2015 (the Rules)) in levels from 2016, with the intention of enhancing the power effectivity of privately rented buildings in England & Wales. The requirements are measured by reference to the power efficiency certificates (EPC) score (A-G) of a property and have an effect on personal rented properties in each the residential and industrial sectors. This word offers with MEES in relation to industrial properties (referred to within the Rules as “non-domestic”) solely.
The Rules are staggered so that originally (from 1 April 2018) solely new tenancies/renewals have been caught however from 1 April 2023 all industrial properties that are let together with on current tenancies should have an EPC score of E or larger. The place a property’s EPC score is decrease than an E it’s termed “sub-standard” and the Rules require landlords to make power effectivity enhancements to rectify that, or register a related exemption on the PRS Exemptions Register.
EXCEPTIONS & EXEMPTIONS
The Rules don’t apply if:
- the time period of the tenancy is lower than 6 months (until it comprises an choice to renew the time period or lengthen it past 6 months, or if the tenant has already been in occupation for greater than 12 months);
- the time period of the tenancy is greater than 99 years; or
- the necessity for a present EPC certificates has not been triggered for the related constructing or area. For many new or current tenancies, the necessity for an EPC could have been triggered, however this won’t all the time be the case.
The place the Rules do apply, however landlords can even be permitted to proceed to let sub-standard industrial properties if one of many following exemptions applies and is formally claimed:
CONSEQUENCES OF BREACH
A breach of the Rules won’t invalidate a tenancy per se. There could, nonetheless be each reputational harm to the owner (together with publication of the breach on a publicly accessible a part of the PRS Exemptions Register) and monetary penalties as follows:
It’s for native authorities (weights and measures/buying and selling requirements) to pursue breaches however up to now they’ve struggled with the useful resource (and arguably the inducement) to take action – on the date of writing there may be nonetheless no proof on the register of any breaches being recorded or fines being levied. Recognising this problem, BEIS ran an enforcement pilot in 2019, adopted by an enforcement competitors in 2021 with additional funding for the 59 profitable authorities. Finest apply steering has been promised – there have lengthy been rumours a future repair will embrace a direct minimize of the penalty pot for native authorities.
In its 2020 power white paper, “Powering our Internet Zero Future”, the Authorities set out the goal to ship web zero by 2050. It recommended that industrial properties ought to have an EPC score of B or larger by 2030 however crucially solely the place “price efficient”. MEES consultations have been run in 2019 and in 2021 however up to now haven’t resulted in any dedication to additional laws. The 2021 session envisaged two enforcement home windows – the primary operating 2025-2027 to realize an EPC C and second operating 2028-2030 to hit an EPC B, with all EPCs in a single register. Higher visibility of knowledge would enable native authorities to implement extra successfully. There may also be obligations on tenants to help with compliance – a burden that rests solely on landlords underneath the present regime.
Nonetheless, there’s a plethora of things the Authorities must rigorously steadiness earlier than making its subsequent transfer together with the state of the financial system and the pressure on companies (each landlords and tenants) nonetheless recovering from the results of Covid-19 and Brexit. The policymakers want to think about a backdrop of cynicism on EPCs from trade specialists together with an April 2022 RICS revealed article warning that they (and specifically the Normal Evaluation Process on which the score is essentially primarily based) should be up to date with a view to stay match for goal. In the meantime, because the race to high quality accelerates, the premium industrial market is shifting in direction of accreditations that extra precisely mirror the best way through which premises carry out as soon as occupied, equivalent to NABERS UK and BREEAM and the shared obligations and alternatives they entail.