Commercial landlords and minimum energy efficiency standards

Property developers, management companies and commercial landlords of rented properties need to ensure they adhere to new industry regulations or face hefty fines.

As of April 2018, it will be unlawful for landlords of commercial properties to grant a new lease to a new or existing tenant with a property that has an Energy Performance Certificate (EPC) rating of F or G.

The Minimum Energy Efficiency Standards (MEES) regulations were created to make rental properties more energy efficient, forcing typically reluctant landlords to make ‘green’ improvements.

Landlords’ historic reluctance to make such improvements is due to the fact that the tenant is generally the one to be affected by high energy bills and not them. As such, approximately 19% of all commercial properties that require an EPC are already falling below the minimum F rating.

Scotland is not currently affected by the MEES regulations, but is subject to a similar regulation.

How do I prepare?

• The first thing is to identify which of your properties have an EPC, and of those which do not meet the minimum EPC rating. It is important to understand why a building has a low EPC rating in order to decide on how to improve the rating.
• You must check the lease terms for rights to enter the premises in order to obtain estimates for work, implement work and recover the costs. Older leases are likely to be less flexible towards landlords.
• Once you have a clear idea of your costings, you might find it more cost effective for the tenant to carry out the improvements, or it may not be cost effective at all, and then you may wish to consider disposal.