Professional Teams Collaborate to Explain Future Minimum Energy Efficiency Requirements and Outline Steps Owners and Occupiers Need to Take to Comply
The vast majority (88%) of non-domestic properties will need to be improved over the next 10 years to comply with potential future Minimum Energy Efficiency Standards (MEES) requirements. In real numbers this equates to over half a million individual assets that would need to be improved in terms of reducing their energy consumption and carbon emissions.
This opening statistic is the scene setter for a briefing note “Energy Performance in Non-Domestic Buildings” brought together by property consultants Gerald Eve, law firm Irwin Mitchell and EVORA EDGE, the building services engineering consultancy explaining the real challenge for the property industry in the years ahead - when compliance with MEES means buildings will need to increase from an EPC E rating in 2023 to an EPC rating B by 2020.
The note which provides advice relevant to investors, developers, owners and occupiers of commercial property explains that action needs to be taken sooner rather than later and sets out:
- Current requirements for MEES- but how the landscape is changing in both 2023 and 2030, by which time the future trajectory for non-domestic MEES will be EPC B by 2030
- Fines for non-compliance - which will range from £5000 to £150,000
- Temporary, five-year exceptions and exemptions- and how and when these need to be lodged
- Whether a building is legally required to have an EPC
- Changes we can expect from the Government in the future. The Government recently consulted on two important proposals on energy performance and a response is expected in the Autumn. This will include whether it will establish an additional performance-based policy for larger commercial and industrial buildings over 1,000 sq. m.
- Expected range of changes as to how EPC are calculated- which could affect current EPC ratings and hence marketability of buildings
- Considerations and approaches to mitigating and managing risk and improving energy performance- including a table of proposed tasks property owners should consider following
- Calculating the costs of improving energy performance, including what may be reclaimed back under service charge and what needs capital expenditure.
- Importance of using a “Planned Maintenance Report” (PRM) as a model to identify such costs.
The note also helpfully provides different landlord scenarios and details about the latest consultations.
The authors of the report commented: “Changing legislation is likely to only heighten existing concerns regarding MEES for both landlords and lenders in relation to marketability, rental value, capital values and security of income. This may also impact the lending system as properties with lower ratings will have greater level of risk applied to them.”
Expert Opinion“As lease lengths shorten and companies look to improve their ESG credentials, the impact of MEES legislation is likely to become an even bigger issue than it is now.
“We are delighted to have collaborated with Gerald Eve and EVORA EDGE to encourage clients and contacts to consider the issues in good time and get the framework in place for compliance by 2030.” Paul Henson - Partner