LIVE24SEVEN // Business L EGAL ADV I C E – THOMSON & BANC K S
Is your property as efficient as your washing machine?
Sally McFadden, Associate Solicitor of Thomson & Bancks Solicitors looks at the new Minimum Energy Efficiency Standards affecting buildings.
We are all used to seeing the rainbow coloured energy efficiency graphs on white goods, and research shows that A++ ratings positively influence our buying choices. From April 2018 a new legal standard for minimum energy efficiency will apply to rented commercial and residential buildings.
WHAT ARE MINIMUM ENERGY EFFICIENCY STANDARDS (MEES)? The government has introduced Minimum Energy Efficiency Standards to deal with the UK’s older buildings. MEES affect a landlord’s ability to grant leases or tenancies if a building doesn’t meet the minimum energy performance rating. This is currently set at E but may be subject to change. Non-compliant premises are known in the regulations as ‘substandard property’ and must be brought up to the minimum standard, or above, before they can be let.
Under the regulations tenants have the right to request that a landlord carry out energy efficiency measures, this cannot unreasonably be refused by the landlord.
WHAT BUILDINGS ARE AFFECTED? The MEES regulations affect both residential and commercial properties. • All new lettings (including renewals and extensions) of both domestic and commercial property must comply by 1 April 2018.
• Premises which are already let need to reach the minimum standards by 1 April 2020 for residential property and 1 April 2023 for commercial property.
HOW DO I FIND OUT THE ENERGY PERFORMANCE RATING? Asset ratings are provided on an Energy Performance Certificate (EPC). This must be issued by a qualified assessor, and contain a graph similar to those on white goods, which shows the asset rating from A to G. It also contains additional information about the energy efficiency of the property and a recommendations report. All EPCs are held centrally with separate registers for residential property and commercial or mixed use property.
WHAT HAPPENS IF A BUILDING DOESN’T MEET THE MINIMUM STANDARD? Although the way MEES are drafted means there is no obligation to make improvements to substandard property, landlords are prevented from letting the property until the minimum standard is met. There are penalties for letting a substandard property which can be significant depending on the value of the property, and may be as much as £150,000.
DO MEES APPLY TO LISTED BUILDINGS? Whilst there is no legal requirement to have an energy performance certificate for a listed building there is no blanket exemption. The regulations state that improvements should be made if the character and appearance of the building are not altered. You may want to get an EPC to check what, if any, improvements are recommended to make sure that you are ahead of the game.
IF I OWN A BUILDING WHAT SHOULD I BE DOING? As a landlord, you should take a good look at your portfolio: • identify which buildings are legally required to have an EPC; • review the EPC rating achieved; • consider carrying out works beyond the minimum required level, as the minimum standards are likely to alter in the future;
• check if you are eligible for any grants or subsidies or if you can take advantage of Enhanced Capital Allowances for any improvements;
• look at the impact of energy performance on the longer term value of your property. People are choosing more efficient white goods, similarly energy efficiency is influencing tenants in their choice of property.
WHAT NEXT? To date, very few landlords have started fully investigating this issue but we would recommend reviewing your portfolio now, obtaining any EPCs required and looking at where you should be carrying out any improvements well ahead of 1 April 2018. Act now to avoid being an April fool!
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