Changes to the Minimum Energy Efficiency Standards will come into force on 1st April – rendering non-domestic buildings unlettable unless they have an EPC (Energy Performance Certificate) rating of E or above.
The MEES regulations previously prohibited non-domestic landlords from granting new tenancies if the building had an EPC rating of Grade F or G. However, on 1 April 2023, it starts to apply to existing tenancies, too.
Statistics suggest that many landlords are unprepared for the changes. Research from international real estate advisor Savills found that 185 million sq ft of UK retail space does not meet the required standards. Another survey by Deloitte found that 10% of London’s office buildings share the same fate.
Future tightening of MEES regulations
There are stricter regulations on the way in the future, too. The government has confirmed that it will require all commercial buildings to be rated a minimum of Grade B by 2030. It is expected that a minimum target of Grade C by 2027 will be put in place, as an interim step.
The recent government-commissioned Net Zero Review calls for all new non-domestic buildings to be EPC B by 2025.
Becoming MEES compliant
If your building is rated F or G, you will need to identify and implement energy efficiency improvements that bring the building to E rating or better. Penalties for being in breach of the regulations for more than three months equate to £10,000 or 20% of rateable value (with a maximum penalty of £150,000).
It is possible to claim an exemption from complying with the MEES, if you can demonstrate that the cost of purchasing and installing a recommended improvement or improvements does not meet a 7-year payback test.
There are of course, commercial as well as regulatory benefits to a MEES-compliant retrofit. Energy efficiency is front of mind for many businesses tackling energy price rises and volatility, and there is increasing demand for properties that align with climate and wellbeing strategies.
Deloitte’s recent Crane Survey found that “tenants’ own commitments to sustainability have redefined what offices they want to occupy in the future and how quickly they need to move to achieve those targets. Tenants are more likely than ever to reject offices that do not meet certain ESG criteria.”
For more information on the MEES regulations, visit the government website, or contact us if you would like advice on compliance.
