From 1 April 2018, it will be illegal for a landlord to grant a new lease of commercial premises that have an EPC rating of ‘F’ or ‘G’. This is the impact of the first tranche of new regulations known as the Minimum Energy Efficiency Standards (MEES).
If a premises is caught by MEES, it may still be capable of being let if it falls within one of a number of exemptions which includes (i) the recommended improvements do not pay for themselves in energy savings over a 7 year period and (ii) if making the energy improvements would reduce the value of the premises by more than 5%. If an exemption applies, the landlord must register the exemption on a central register and once registered, the exemption will be valid for 5 years.
However, the UK has a problem with a lack of energy efficient commercial premises with current estimates suggesting around 18% of commercial properties have an ‘F’ or ‘G’ rating. Landlords need to urgently review the energy performance of their premise, as the penalties for getting it wrong include a civil penalty of up to £150,000 and the landlord’s details being put on a ‘name and shame’ register.