Sustainable Biz Magazine - Magazine - Page 37
Private Rented Sector Exemptions Register
and do not automatically apply. They are
also time-limited – an exemption typically
lasts 5 years, so landlords will need to
regularly review their compliance; and the
exemption cannot be transferred, so any
new purchaser would need to reassess the
situation.
What do I need to do?
Landlords of commercial properties
therefore need to review their property
portfolios to identify properties that may
be sub-standard, and consider whether
any energy efficiency improvements
can be carried out – and whether any
exemptions may apply.
Landlords and tenants will also need
to consider the potential implications
for future business interruption when
negotiating the terms of new leases –
collaboration will be important to ensure
minimal interruption for both parties when
considering any future works that may be
required to a building to avoid a breach of
the regulations.
What are the penalties?
The MEES regulations do not place a legal
obligation on a landlord to carry out works
to improve the energy efficiency; but the
landlord can be liable if it is in breach.
If a landlord chooses to let a sub-standard
property, or continues an existing letting
of a sub-standard property, without
making the necessary energy efficiency
improvements (and valid registered
exemption) the landlord runs the risk of
enforcement action.
There are potential financial penalties
(ranging from £5,000 to £150,000
depending on the value of the property
and the duration of the breach) as well as
potential reputational risks, as breaches
are published on a public register.
To date enforcement has been minimal
for various reasons including a lack of
available resources at local authorities –
but as climate change continues to be a
priority at a national and global level, we
can expect increased focus on this area
in the future. In 2021-22 a programme of
grant funding was announced to help local
authorities develop their MEES compliance
and enforcement operations, so this is
likely to see an increased scrutiny on substandard properties in the near future.
What’s coming next?
Climate policy is predicted to be of
increasing importance across the
globe, as all countries and governments
continue to look towards improving their
environmental performance.
The UK government is committed to
improving the country’s environmental
credentials – so there are proposals to
increase the minimum energy efficiency
standard to C by 2027 and B by 2030. If
these changes are brought in they are
likely to have a significant impact for many
commercial landlords, who may need to
carry out further improvements to the
energy efficiency of their buildings.
The Government may also look to impose
duties for MEES compliance on tenants,
including in relation to tenant fit-out
works – so there may be future obligations
on tenants to introduce and pay for
energy efficiency improvements.
There has also been discussion of
“green leases” which contain a series of
additional provisions agreed by landlord
and tenant, imposing obligations on
each party to manage and reduce the
environmental impact of a property by
way of improvements. This obviously
comes with potential costs which can be
off-putting for businesses and individuals,
but there may be increasing incentives in
future to encourage parties to sign up to
these obligations.
It is clear that there can be a conflict
between the financial objectives of a
business and its environmental targets
(whether voluntary or imposed) but there
are likely to be increasing incentives for
achieving energy efficiency improvements
– so landlords and tenants will need to be
aware of these and act soon.
For more information on how your
business could embrace more
sustainable practices contact us
here or…Talk to Tollers on 01438
901095, our teams are on hand to
guide you through.
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