MEES: “Minimum Energy Efficiency Standard” for commercial buildings

MEES guide to the minimum energy efficiency standard for commercial buildings

A guide for landlords, investors, developers and lenders on the new legal standard for minimum energy efficiency.

12 Jan 2018

What is the minimum energy efficiency standard (MEES)?

The minimum energy efficiency standard (MEES) was introduced in March 2015 by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. The MEES Regulations originate from the Energy Act 2011 which contained the previous coalition government’s package of energy efficiency policies including the Green Deal.

At the moment commercial buildings have an energy efficiency rating that goes from A – G. F and G are the worst performing. What the new law will do is introduce a minimum standard of E and that means that buildings cannot be rented out unless they meet that standard.

From 1 April 2018, landlords of buildings within the scope of the MEES Regulations must not renew existing tenancies or grant new tenancies if the building has less than the minimum energy performance certificate (EPC) rating of E unless the landlord registers an exemption.

After 1 April 2023, landlords must not continue to let any buildings which have an EPC rating of less than E unless the landlord registers an exemption.

Why is the government introducing MEES?

The built environment has been identified by government as a major contributor to Greenhouse Gas (GHG) emissions and thus poses a threat to the UK meeting its carbon reduction targets for 2020 and 2050. Government estimates that 18% of commercial properties hold the lowest EPC ratings of F or G. While Building Regulations ensure that new properties meet current energy efficiency standards, MEES will tackle the UK’s older buildings.

It is important to note that the minimum standard could rise in future.

Which buildings and tenancies does MEES apply to?

Working out if a building and tenancy are caught within the scope of MEES is not always straightforward. MEES does not apply to:

buildings which are not required to have an EPC: such as industrial sites, workshops, non-residential agricultural buildings with a low energy demand, certain listed buildings, temporary properties and holidays lets

buildings where the EPC is over 10 years old or where there is no EPC

tenancies of less than 6 months (with no right of renewal)

tenancies of over 99 years.

Determining whether a building and tenancy are within scope requires owners to look at two sets of regulations: Energy Performance of Buildings (England and Wales) 2012 and the MEES Regulations. The interplay of the regulations is complex and creates some potential loopholes. The government’s Guidance for Landlords (PDF) provides explanations of how MEES will apply in particular circumstances such as leases of part of buildings.

What are the exemptions?

Landlords can let a building to which the MEES Regulations apply but which is below the minimum standard if any of the exemptions apply. These are:

The ‘Golden Rule’: where an independent assessor determines that all relevant energy efficiency improvements have been made to the property or that improvements that could be made but have not been made would not pay for themselves through energy savings within seven years. There are numerous examples of “relevant” energy efficiency improvements which include double-glazing and pipework insulation which need to be considered; wall-insulation measures are not required where an expert determines that these would damage the fabric of the property.

Devaluation: where an independent surveyor determines that the relevant energy efficiency improvements that could be made to the property are likely to reduce the market value of the property by more than 5%.

Third Party Consent: where consent from persons such as a tenant, a superior landlord or planning authorities has been refused or has been given with conditions with which the landlord cannot reasonably comply.

Exemptions must be registered on the central government PRS Exemptions Register. The register was intended to go live in October 2016 but is now due on 1 April 2018.

The exemptions are valid for five years only and cannot be transferred to a new landlord.

What are the penalties for non-compliance?

The MEES Regulations will be enforced by Local Weights and Measures Authorities (LWMAs). LWMAs will have powers to impose civil penalties which are set by reference to the property’s rateable value.

The penalty for renting out a property for a period of fewer than three months in breach of the MEES Regulations will be equivalent to 10% of the property’s rateable value, subject to a minimum penalty of £5,000 and a maximum of £50,000. After three months, the penalty rises to 20% of the rateable value, with a minimum penalty of £10,000 and a maximum of £150,000.

Where a property is let in breach of the MEES Regulations or where a penalty is imposed, the lease as between the landlord and the tenant remains valid and in force.

What are the threats and opportunities for landlords and what should they do now?

Landlords are likely to be the most affected parties because the key obligations and restrictions in the MEES Regulations fall on them.

The most obvious threat to landlords is the financial cost of upgrading non-compliant buildings and the potential loss of income if a property cannot be rented out.

The provisions in existing leases may affect the statutory obligations of landlords under the MEES Regulations and may affect the position of the Landlord in dealing with the MEES Regulations. For example:

for a landlord hoping to delay compliance for as long as possible, standard leases may not contain sufficient restrictions on tenants subletting which could trigger the landlord’s obligations

lease provisions on service charges, yielding-up, statutory compliance and rent reviews may not allow a landlord to recover the capital expenditure required for improvements from the tenant

for a landlord looking to make improvements, the landlord’s rights to enter may not extend to entry for installing energy efficiency improvements or there may be restrictions in a headlease to consider.

There are, however, opportunities for landlords to engage with tenants to enter green leases where the environmental management and costs of the property, such as energy efficiency improvements and utility bills, are shared for the benefit of both parties.

There are also opportunities to explore the potential to increase rental and asset value through making energy efficiency improvements and combining these with other refit upgrades.

Landlords can prepare now by:

auditing their portfolios to understand which properties are within scope of the MEES Regulations and whether exemptions might apply

carrying out energy assessments to check whether the EPC ratings for their properties are correct

understanding how lease terms, break dates, renewals dates and planned refit periods fit with the MEES timetable above

reviewing their leases to understand their rights.

What is the impact on freehold investors and developers and what should they do now?

Freehold investors who own reversionary freehold assets will not be landlords for the purposes of the MEES Regulations where the term of the headlease is over 99 years. However, the MEES Regulations will still have an impact.

The key issue for freehold investors is that there is a threat of reduction in value of any property assets which do not meet the minimum standard. Further, freehold investors may struggle to find new tenant landlords willing to sub-let a property if it means they will need to carry out improvements.

On the other hand, freehold investors with tenant landlords already in place will benefit from having energy improvements made to their reversionary asset paid for by the landlord tenant.

Freehold investors may themselves be landlords for the purposes of the MEES Regulations where the term of the headlease is less than 99 years (and therefore within the scope of the MEES Regulations). Where a property has more than one landlord, the question of which landlord is required to pay for installing energy efficiency improvements is likely to depend on the terms of the headlease.

Developers who own freehold assets awaiting development could face similar issues to freehold investors and could find that the timetables of their future development programmes are affected by the MEES Regulations. However, the MEES Regulations may also create opportunities for developers through reducing the acquisition costs of property below the minimum standard.

Similar to landlords, investors and developers can prepare now by auditing their portfolios to identify which properties may be within scope of the MEES Regulations and understanding how the terms of the headleases and future development programmes fit with the MEES timetable above.

What is the impact on lenders and what should they do now?

Lenders will also be affected by the MEES Regulations.

There is a threat to lenders where a building does not meet the minimum standard leading to a reduction in value of their security and ability to let the property thereby affecting the ability of a landlord borrower to make repayments due to loss of rental income and additional capital expenditure costs.

There is a further threat to lenders where they take possession of a property following default and become freehold investors or landlords and, thus, subject to the MEES Regulations themselves.

In the absence of a government scheme to provide finance for landlords (which had been the intention of government in 2011), the MEES Regulations also provide opportunities to lenders where landlords need to borrow to bring their properties up to the minimum standard.

Lenders can prepare now by reviewing their lending criteria and conditions to check:

whether they are obtaining sufficient information on valuation of the asset to; understand the impacts of MEES on their security, correctly price the risk and cost of borrowing and enable them to monitor the risk adequately

whether loan monitoring procedures need to be adapted to take account of the potential risks; (e.g. mandating that EPC certificates are provided by the borrower on all non-exempt lettings and/or requesting borrowers undertake and provide an MEES audit/strategy plan prior to the 2018 deadline)

whether the undertakings and representations in their facility agreements provide suitable protections and rights against borrowers who fail to comply with their statutory obligations under the MEES Regulations.

What happens next?

On 30 June 2016, the government made changes to the law to release the data held in respect of EPCs of commercial property. Making this data publicly available in bulk is intended to encourage the property industry to scrutinise and compare the energy efficiency ratings of buildings more closely and influence the decision making of tenants, landlords, investors and lenders. From this, we are likely to see the beginnings of the market response to the approaching MEES Regulations.

Amendments in 2015 to the Energy Performance of Buildings (England and Wales) Regulations 2012 now require local authorities to report to government, on an annual basis, on enforcement activities undertaken in relation to EPCs. This may deliver more interest in EPCs and more active enforcement from LWMAs.

Since the General Election in May 2015, doubts have been raised as to whether the government will actually implement MEES in 2018 due to opposition to the policy from the property industry. In addition, Brexit could provide the opportunity to repeal the Energy Performance of Buildings (England and Wales) Regulations 2012, which underpin the MEES Regulations, because these implement the EU Energy Performance of Buildings Directive 2010. Nevertheless, the underlying policy for the MEES Regulations originated in the UK not the EU and the MEES Regulations remain on the statute books. Parties should therefore assume that MEES will apply from 1 April 2018.

The government published its long-anticipated Guidance for Landlords (PDF) on 23 February 2017. The Guidance for Landlords is designed to help landlords, freehold investors, lenders and enforcement authorities to prepare for the MEES Regulations.

With the clock ticking to implementation of the MEES standard on 1 April 2018, parties are well-advised to get to grips with how the MEES Regulations will affect their properties and the best strategy for compliance. Failing to understand the impact of the MEES Regulations on leases, lending conditions and on purchasing properties could lead to increased costs or non-compliance later.

How can Energy Apprise help?

Energy Apprise have been working with clients to prepare them for the forthcoming changes. We would be happy to discuss the best approach for you and your property portfolio.

For more information on MEES please call Andy Bray on 07799863727

EPC Bristol

EPC Bristol – Energy Performance Certificates

How do I know if I need an EPC?

An EPC is now required by law when a building is constructed, sold or put on the market for rental purposes.

Sellers or buyers of homes

All sellers of homes need to ensure that an EPC is made available to a potential homebuyer.

Landlords

Landlords are required to make an EPC available to prospective tenants the first time they let a home after 1 October 2008. An EPC is only required for a property which is self-contained, and is valid for 10 years.  Where a tenant rents a room and shares facilities, an EPC isn’t required.

Tenants

If you are looking to rent a property then an EPC must be made available to you free of charge. An EPC is only required for self-contained properties: an EPC isn’t required when you rent a room and share facilities.

Builders

An EPC needs to be provided to buyers of newly built properties.

Price For an EPC in Bristol

For prices on Domestic and commercial EPC’s in the Bristol, Bath and surrounding areas, please contact us. We provide competitive prices and a fast turnaround.

EPCs provide:

  • Data regarding the energy usage and carbon dioxide emissions of a property
  • Recommendations and suggestions to lower the energy use and carbon dioxide emissions of that property

EPC’s show energy ratings and compare the current energy efficiency and carbon dioxide emissions with the potential ratings that the building could achieve. The “Potential” EPC Bristolratings

are calculated by estimating what the energy efficiency and carbon dioxide emissions would be if the energy saving recommendations were put into place.

The Energy ratings graph measures the energy and carbon emission efficiency of your home using a grade from A to G. An A rating is the best, whilst G is the least efficient. All homes are measured using the same calculations.  This enables the direct comparison of the energy efficiency of different properties.

You are under no obligation to act on the recommendations in the recommendation report. However, in doing so, it could lower your energy costs and make your property more attractive for sale or rent.

Commercial EPC Bristol

Commercial EPC’s – Bristol, Bath & Surrounding Areas

The Commercial Energy Performance Certificate or “EPC” is designed to help reduce the commercial energy consumption by properties in the United Kingdom by encouraging a commercial epc bristolgreater awareness of the energy efficiency of our business premises.  In so doing, it becomes possible to make changes that will increase efficiency and reduce energy consumption in the future.

Energy Apprise are fully

qualified and able to prepare commercial EPC’s in the Bristol and surrounding areas.

Video: Commercial EPC Bristol

An EPC is a valuable asset to any business owner due to it’s inherent properties. A commercial EPC states the projected running costs of the property in question and also suggests the improvements which can be made to deliver greater efficiencies.
By making the property more efficient, vast energy savings can be made and as  another plus point, the sale or rental value may increase together with a greater possibility of it being sold or leased.
Energy Apprise will ensure useful and accurate data is provided in a timely manner. As an independent company, we offer flexibility, fast turnaround and competitive pricing.Commercial property EPC Bristol So if you need a Commercial EPC in Bristol, call us today on 0779 986 3727

Energy Performance Certificates Commercial Property Bristol

Energy Performance Certificates For Commercial Property – Bristol

Energy-Performance-Certificates-Commercial-Property-BristolCommercial Energy Performance Certificates (or Commercial EPC’s) are similar to domestic EPC’s. The energy certificates for commercial buildings will have a similar look and carry the graphical energy ratings as for domestic energy certificates.

A Display Energy Certificate (or DEC) is rather different in appearance and the contains different information to that of a Commercial EPC.  DEC’s must be displayed in a public place and are applicable to public buildings only.

 

Legislation for Commercial and Domestic EPCs

As from 6 April 2008:
An EPC is required on construction for all dwellings.
EPC’s are required for the construction, sale or rent of buildings other than dwellings with a floor area over 10,000 m2.

As from 1 July 2008:
EPC’s are required for the construction, sale or rent of buildings other than dwellings with a floor area over 2,500 m2.

As from 1 October 2008 – EPC’s are required on the sale or rent of all remaining dwellings.
EPC’s are also required on the construction, sale or rent of all remaining buildings other than dwellings.
Display certificates required for all public buildings in excess of 1,000 m2.

By 4 January 2009 – First inspection of all existing air-conditioning systems over 250 kW must have occurred by this date

By 4 January 2011 – First inspection of all remaining air-conditioning systems over 12 kW must have occurred by this date

A system which is first put into service on or after 1 January 2008 must have a first inspection within 5 years of it first being put into service.

These dates and details may be subject to revision at any time. These dates released by CLG. Please check with the CLG Website for clarification and up-to-date legislation.

Exemptions to the requirement for a Commercial EPC, these exemptions include:

Places of Worship, such as churches
Temporary Buildings: In Use For Less Than 2 Years (Portable Buildings and Site Buildings)
Low Energy Demand Buildings (example Farms Outbuildings and Barns)
Stand Alone Buildings Less Than 50m2. (Small outbuildings like Sheds or Summer Houses): In general, commercial premises are exempt that are less than 50m2 Gross Internal Area. (GIA)

EPBD Surveys

The EU Energy Performance of Buildings Directive (or EPBD), stipulates that as from April 2008 any commercial property in the UK, which is within certain limits, will require an Energy Performance Certificate upon construction, or prior to the sale or lease of existing properties in the UK.

The Cost of Commercial EPC’s in Bristol

Commercial EPC costs associated with the issue of an Energy Performance Certificate (EPC) for non-dwellings or Display Energy Certificates (DEC) for public buildings are difficult to quantify due to the nature of the construction, the complexity, and size of the building which is being examined in each individual case.  It is best to call for a quote, having handy some basic details of the property to be assessed, such as square footage, number of floors and an outline of what the premises are used for.

Commercial EPC period of validity

Commercial EPC’s are valid for up to 10 years. The certificate must be made available to a prospective tenant or buyer before entering a contract for sale, rent, or lease.

About Energy Performance Certificates For Commercial Properties

The assessment/survey is carried out (In England & Wales) using Simplified Building Energy Model (SBEM) which is also used for part L of the Building Regulations. A number of energy assessment procedures may be employed dependent on the type of building and its use. Such methods include SAP, SBEM procedures: Property managers refer to Business Energy Saving Measures to reduce overheads and improve your buildings energy rating.

Video: Energy Performance Certificates Commercial Property Bristol

 

Commercial Energy Performance Certificates Bristol

Commercial EPC’s Bristol

 

All commercial buildings in Bristol (and the rest of the UK) are required by law to have a commercial energy performance certificate (or “Commercial EPC”). Such a document acts as a reliable measure of a building’s energy efficiency and it provides a separate rating which indicates its impact on the environment.Commercial Energy Performance Certificate Bristol

 

The UK has made a pledge to reduce its CO2 emissions by 20% by the year 2020. This will only be achieved by introducing initiatives such as the mandatory requirement for domestic and commercial energy performance certificates.

 

Commercial energy performance certificates work in a very similar way to the domestic EPC.  Properties are assessed on factors such as the construction date, materials used and the level of insulation in place. These and many other factors are taken into account for a grade to given to the property, ranging from A to G. The EPC also provides advice on how to improve the building’s rating: This valuable information can enable property owners to make significant savings on their future energy bills.

Due to the vastly varying nature of commercial buildings, the process of obtaining a commercial EPC can be complicated, but help is at hand. Energy Apprise are able to tackle all property types. Contact us today for a no obligation quotation.