Minimum Energy Efficiency Standards become law

Earlier this year, the long awaited regulations on minimum energy efficiency standards in England and Wales became law. These regulations make it unlawful to let residential or commercial properties with an EPC Rating of F or G (i.e. the lowest 2 grades of energy efficiency).

This could have very significant implications for landlords, and for occupiers who wish to assign or sublet space with estimates that approximately 20% of non-domestic properties are F & G rated.

The regulations will apply from 1st April 2018 to new leases and lease renewals and from 1st April 2023 to all private rented properties, where there is an existing lease and tenant in occupation.

Exemptions will apply to properties already excluded from existing EPC obligations; for example Listed buildings; to properties let on short-term (6 months or less) or long-term (99 years or more) tenancies.

There are some further exemptions:

  • If the proposed energy efficiency improvement measures are not considered cost-effective to implement. As assessed against a seven year simple payback, or the Green Deal Golden Rule.
  • The landlord cannot obtain third party consents for installing energy efficiency improvements, including consent from tenants, lenders, superior landlords and planning authority.
  • A report is prepared by independent surveyor which states that making the relevant energy efficiency improvement would result in a reduction of more than 5% in the market value of the property, or of the building of which it forms part.

Given a clear timeline and direction for building energy efficiency is now in place, commercial property landlords should be taking action now to understand how to meet the requirements that become effective 1st April 2018. This should include what properties will be affected, a plan of improvements – including getting good ‘data’ on building performance – and timetabling these improvements alongside planned works and maintenance.

If you need further information or help understanding what you need to do and when please contact Lesley Treacy (Lesley.Treacy@greengage-env.com) or Iain Fraser, who is a qualified Energy Assessor and ESOS Lead Assessor (Iain.Fraser@greengage-env.com).

To find out more about our services see our Video Series – Energy & Sustainability.