Author: Deborah Caldwell, Professional Support Lawyer, Real Estate, London
In February 2015, we reported on Regulations introduced by the Government to prohibit the letting of commercial properties in England and Wales rated F or G on their Energy Performance Certificates ("EPC"s) (see our blog post here). With some exceptions, these Regulations, known as the Minimum Energy Efficiency Standard ("MEES"), affect the majority of commercial leases. The Regulations will come into force from 1 April 2018 for new leases (including lease renewals) and 1 April 2023 for all leases. "Sub-standard properties" is the new label that will attach to properties with an energy efficiency rating below E.
There are two recent developments for landlords to be aware of:
- Government guidance on the MEES Regulations has recently been published; and
- The opening date for the centralised self-certification register known as the PRS Exemptions Register ("PER") has been delayed.
The Government has launched a major consultation on the energy reporting and taxation regime for UK businesses. The consultation recognises that at present there are a number of overlapping energy efficiency schemes in force. This has created a high degree of complexity and potentially does not incentivise behaviours as intended. The Government is therefore considering reform to simplify regulation and meet EU 2020 environmental targets through encouraging investment in energy efficiency and low-carbon alternatives. Notably the proposals include replacing the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) and Climate Change Levy (CCL) in favour of a single business energy consumption tax (based on the current CCL) and a single reporting framework. The consultation appears to set the tone for extensive future engagement in this area rather than setting out any definitive conclusions. This may present businesses with an opportunity to influence the future direction of policy.
The Government has introduced regulations to prohibit the letting of commercial properties in England and Wales rated F or G on their Energy Performance Certificates (EPCs) until their energy efficiency is improved and attains at least an E rating. It is believed that the regulations could catch up to 17% of commercial buildings.
1. When do the regulations come into force?
2. Which properties are in scope?
3. Restrictions on making improvements
5. The Exemption Register