Commercial Properties

From April 1, 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.

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

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.

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.