What is Sustainability?
Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Clients may have an existing environmental policy or Environmental Management System that sets out an overall sustainability vision, as well as detailed objectives and targets
Property - Green leases, MoU’s, sustainable retrofits
MoU – e.g. provision of data, efficient use of energy, specific materials to be used in refurbishment, repair policy
What are the Building Regulations?
A = Structure.
B = Fire Safety.
C = Site Preparation.
D = Toxic Substances.
E = Resistance to Sound.
F = Ventilation.
G = Sanitisation and Hot Water.
H = Drainage and Waste Disposal.
J = Heat Producing Appliances.
K = Prevention from falling, collision or impact.
L = Conservation of Fuel and Power.
M = Accessibility.
N = Glazing.
P = Electrical Safety.
Q = Security.
R = High speed comms networks
S = Materials and workmanship
What is the Energy Act?
- The Energy Efficiency (Private Rented Sector) (England and Wales) Regulations 2015 will make it unlawful from April 2018 to let residential or commercial properties with an Energy Performance Certificate (EPC) rating of ‘F’ or ‘G’ (i.e. the lowest 2 grades of energy efficiency).
- The new regulations will have very significant implications for landlords, and for occupiers who wish to assign or sublet space, as the marketability of some properties would become impossible unless they were upgraded to meet the minimum standards. Landlords need to take action now to avoid penalties and protect the value of their assets.
- MEES applies in England and Wales only. In January 2016, the Scottish Government published a draft of the Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 which will come into force on 1st September 2016. A separate briefing note on the Scottish regulations is available.
What are the requirements for an EPC certificate?
The minimum energy efficiency standard is set at an EPC rating of ‘E’.
- From 1st April 2018, the regulations will be enforced upon the granting of a new lease and the renewal of existing leases. Landlords will be required to ensure compliance before the lease is granted. In special circumstances, landlords will be given an extension of six months from the date of the grant of the lease to comply with the regulations.
- From 1st April 2023, MEES will be extended to cover all leases, including where a lease is already in place.
- All non-domestic property types are in scope of the regulations, except for those that do not require an EPC under current regulations, such as listed buildings
- MEES does not apply to lettings of 6 months or less, or to lettings of 99 years or more.
- The regulations apply to sub-lettings and assignments.
What are the exemption to MEES?
Landlords will be exempt from having to comply with MEES if they can demonstrate one of the following:
* Places of Worship
* When a tenancy is for more than 99 years
* If a building does not need an EPC
* When the tenancy is less than 6 months and has no security of tenure
* Industrial units with low energy demand (erg not heating or cooling)
* Where it is not feasible to improve the EPC rating to E or above even when all possible improvements with a payback of 7 years or sooner have been made. 3 quotes from the relevant works must be obtained from energy assessors. Payback means energy savings covering the cost of the improvement works within 7 years.
* Consent to undertake works is refused by a third party, such as a Local Authority or an incumbent tenant.
* A suitably qualified expert provides written advice that the improvements would result in a devaluation of the property by 5% or more, or that the works would damage the property.
* Exemptions last for five years and will need to be lodged on a centralised register to be created by Government.
* A landlord who spends £3,500 but is unable to bring the rating to an E is entitled to exemption
What are the consequences if a landlord does not comply with MEES?
Enforcement & Penalties- the regulations will be enforced by Trading Standards Officers.
Penalties will be based on the rateable value of the property, up to a maximum of £150,000, per occasion.
MEES non-compliance commercial penalties
Less than 3 month rental Fine: £5,000 - £50,000 (equivalent to 10% of RV)
More than 3 month rental Fine: £10,000 - £150,000 (equivalent to 20% of RV)
What are the implications when a landlord does not comply with MEES?
MEES will have significant impacts for landlords, including:
- It will make some properties illegal to let unless they are upgraded to meet the minimum standards. It is estimated that approximately 20% of non-domestic properties are in the ‘F’ and ‘G’ rating brackets.
- Valuations of such properties could be affected if their marketability is diminished.
- Rent reviews for properties in this situation could also be affected.
- Implications for dilapidations assessments may also exist.
What actions should a landlord take under MEES with regards to EPC’s?
Where the EPC rating is ‘F’ or ‘G’ (or is at risk of becoming so) an “Energy Efficiency Plan” should be put in place to improve the energy efficiency of the property. This should include assessing the costs and benefits of improving energy efficiency and weighing these against other impacting factors within the business plan for the property.
Energy efficiency improvements should take advantage of void periods, lease breaks and/or be included as part of the on-going maintenance and renewal programme.
