What are the current MEES requirements for commercial properties?
Since April 2023, landlords have been prohibited from continuing to let commercial properties rated below E, not just when granting new leases but when renewing or continuing existing ones. This means any commercial property currently let on an F or G rating is already in breach unless a valid exemption has been registered.
What is changing?
The government has now set out its direction for commercial MEES compliance. Larger commercial buildings, those over 1,000m², are set to require an EPC rating of B by 2031, where cost-effective improvements can achieve it. The previously proposed interim step of EPC C by 2027 has been dropped, and premises of 1,000m² or less remain subject to the existing EPC E minimum. The changes still depend on secondary legislation, but the direction of travel is clear, and landlords who leave action to the last minute face significant costs and void risk.
What are the fines?
Fines for non-compliance are calculated as a percentage of the property’s rateable value, with a minimum of £10,000 and a maximum of £150,000 per property. Details of non-compliant lets are also published on the PRS Exemptions Register, a reputational risk alongside the financial one.
What exemptions are available?
Exemptions exist for properties where improvement works are not technically feasible, would require third-party consent that has been refused, or where the works would not achieve a payback within seven years. Exemptions must be registered on the government’s PRS Exemptions Register and are valid for five years.
What should commercial landlords do now?
Review your current EPC ratings across your portfolio. Identify any properties rated below E; these are a current legal problem. Then look at properties rated E or D, paying particular attention to larger buildings over 1,000m² that are set to need EPC B by 2031. Commission improvement works on the most critical properties first, and get updated EPCs to evidence compliance.