Sustainable Biz Magazine - Magazine - Page 36
Energy Efficiency in Buildings
– What do I need to know?
T
he United Kingdom has some of
the oldest buildings in the world
and many of these were not built to
modern energy efficiency standards.
There has been a requirement to provide
an Energy Performance Certificate (EPC)
on most sales and rental agreements of
residential properties since 2007, and
commercial properties since 2008.
The average EPC rating in England and
Wales is D and the government estimates
that 18% of commercial properties hold
the lowest EPC ratings of F or G.
The Minimum Energy Efficiency Standards
(MEES) regulations, introduced following
legislation passed in 2015, are intended
to improve the UK’s carbon footprint by
setting out required energy standards in
buildings, with a view to improving the
country’s environmental performance.
In the current climate of increasing energy
costs, these changes are perhaps more
important than ever.
What has changed?
Prior to April 2023 it was already unlawful
to grant a new lease of ‘sub-standard’
property – currently defined as a property
with an EPC rating of F or G.
From 1 April 2023 it is now unlawful to
continue to let a commercial property with
an F or G EPC rating, even if the lease was
granted prior to the MEES Regulations
coming into force in 2018.
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“Owners of sub-standard
properties which are covered
by the MEES regulations
may need to carry out energy
efficiency improvements if
they wish to continue to let
the property."
What does it mean for you?
THE MEES regulations cover all buildings
which have a valid EPC. This obviously
means that open sites / outdoor
storage areas etc. are not covered;
and if the property has not had an
EPC commissioned in the last 10 years
then it may not be subject to the MESS
regulations.
Owners of sub-standard properties which
are covered by the MEES regulations
may need to carry out energy efficiency
improvements if they wish to continue to
let the property; although if all relevant
energy efficient improvements have been
met and the property is still ‘sub-standard’
the property can continue to be let.
As an example, the works to the property
must satisfy the seven-year payback test
– this means that the cost of the energy
S USTAI N AB L E B I Z MAGAZINE
NOVEMBER 2023
efficiency improvements should be
capable of recovery (by savings in energy
costs, etc.) within seven years. In the
context of a commercial lease, it may be
the landlord who is responsible for paying
the cost of the energy improvements,
whilst the tenant would receive the
immediate benefit of this cost saving;
provided that the cost saving over a sevenyear period is equivalent to the expenses,
the payback test would still be met.
There are other exemptions which may
apply to a sub-standard property:
(a) Devaluation exemption – a landlord
is not required to undertake energy
efficiency improvements if these would
(in the opinion of an independent
surveyor) reduce the market value of a
property by more than 5%;
(b) New landlord exemption – if a landlord
has recently purchased a property
which is subject to tenancies, there is
a six-month exemption period during
which energy efficiency improvements
do not need to be carried out;
(c) Consent exemption – this can apply if
the landlord cannot improve the energy
efficiency of a sub-standard property
because:
a. tenant consent is required and has
been refused; or
b. third party consent is required and
has been refused.
All exemptions must be registered on the