Domestic Minimum Energy Efficiency Standards (MEES)
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 introduced MEES regulations in England and Wales, setting minimum energy efficiency standards for domestic and commercial properties in the private rented sector. These regulations aim to improve the energy efficiency of private rented property to reduce carbon emissions and help tenants save on energy bills.
Under MEES, landlords of both domestic properties and commercial properties are generally prohibited from granting new tenancies or renewing existing tenancies if the property's EPC rating is below the minimum standard, currently band E. This applies to both domestic properties, such as houses and flats, commercial properties and non domestic rented buildings, including offices, shops, and industrial units.
Commercial EPC ratings explained
Commercial EPC ratings are similar to domestic EPC ratings, using a scale from A to G, with A being the most energy-efficient and G the least. The rating is based on the building's estimated energy consumption per square meter, considering factors such as insulation, heating systems, lighting, and renewable energy sources.
A commercial EPC provides a detailed assessment of the building's energy performance, including:
-
Energy efficiency rating: The overall energy efficiency rating of the building.
-
Estimated energy costs: An estimate of the building's annual energy costs.
-
Carbon dioxide (CO2) emissions: An estimate of the building's annual CO2 emissions.
-
Recommendations for improvement: A list of potential efficiency improvements, including their estimated costs and potential energy savings.
Upcoming Changes in MEES Regulations
The MEES regulations are set to become more stringent in the coming years. From April 1, 2023, it will be unlawful to continue to let a commercial property with an EPC rating below band E. This means that landlords of commercial properties with an EPC rating of F or G will need to make energy efficiency improvements to their properties to comply with the regulations.
Further changes are planned for 2025 and 2027, with the minimum EPC rating for commercial properties and industrial sites expected to rise to band C and band B, respectively. These changes will require landlords to invest in more significant energy improvements to their properties.
Minimum EPC Rating for Commercial Property in 2025
As mentioned earlier, the minimum EPC rating for commercial property is expected to rise to band C in 2025. This means that landlords of commercial properties with an EPC rating of D or below will need to make relevant efficiency improvements to their properties to comply with the regulations.
Obtaining a Commercial Energy Performance Certificate (EPC)
To obtain a commercial EPC, property owners must commission an accredited energy assessor to conduct an assessment of the building. The energy assessor will visit the property, collect data on its energy performance, and produce an EPC.
The EPC is valid for ten years, and a copy must be provided to potential buyers or tenants before a property is sold or let.
How is an EPC for Commercial Property Calculated?
An EPC for a commercial property is calculated using a standardized methodology called the Simplified Building Energy Model (SBEM). SBEM considers various factors that contribute to the building's energy consumption, including:
-
Building fabric: The thermal performance of the building's walls, roof, floors, and windows.
-
Heating and cooling systems: The efficiency of the building's heating and cooling systems, including boilers, air conditioning, and mechanical ventilation systems.
-
Lighting: The efficiency of the building's lighting systems.
-
Renewable energy sources: The use of renewable energy sources, such as solar panels.
The SBEM calculation produces an estimate of the building's annual energy consumption and CO2 emissions, which are then used to determine the EPC rating.
How to improve your EPC Rating
Improving your EPC rating can lead to significant energy savings, reduce your carbon footprint, and increase the market value of your property. There are various ways to improve the energy efficiency of both commercial properties and residential homes, including:
-
Insulation: Improving the insulation of the building's walls, roof, and floors can significantly reduce heat loss and improve energy efficiency.
-
Heating and cooling systems: Upgrading to more energy-efficient heating and cooling systems, such as condensing boilers and air conditioning systems with high Seasonal Energy Efficiency Ratios (SEERs), can reduce energy consumption.
-
Lighting: Replacing traditional lighting with energy-efficient LED lighting can significantly reduce energy consumption and costs.
-
Renewable energy sources: Installing renewable energy sources, such as solar panels or heat pumps, can generate clean energy and reduce reliance on fossil fuels.
Top ways to improve EPC ratings in commercial properties
In addition to the general energy efficiency improvements mentioned above, there are several specific ways to improve EPC ratings in commercial properties:
-
Optimize building design: Incorporating energy-efficient design features, such as natural ventilation and daylighting, can reduce energy consumption.
-
Upgrade building services: Upgrading building services, such as lighting, heating, and air conditioning systems, to more energy-efficient models can significantly improve energy performance.
-
Implement energy management systems: Implementing energy management systems can help monitor and control energy consumption, identify areas for improvement, and optimize energy usage.
-
Engage with tenants: Encouraging tenants to adopt energy-efficient practices, such as turning off lights and equipment when not in use, can contribute to overall energy savings.
EPC Exemptions for Commercial Properties
While most commercial properties require an EPC, certain exemptions apply in particular to certain circumstances. Some common exemptions include:
-
Listed buildings: Listed buildings may be exempt from EPC requirements if compliance would unacceptably alter their character or appearance.
-
Temporary buildings: Temporary buildings with a planned lifespan of two years or less are generally exempt from EPC requirements.
-
Non-residential agricultural buildings: Buildings used for agricultural purposes that are not used for dwelling are typically exempt from EPC requirements.
-
Detached buildings with a total floor space of less than 50 square meters: Small detached buildings with a total floor space of less than 50 square meters are generally exempt from EPC requirements.
It's important to note that exemptions are granted subject only to specific conditions and may require supporting documentation. Property owners should consult with an accredited energy assessor or seek legal advice to determine if their property qualifies for an exemption.
Navigating MEES Regulations and Commercial EPC Requirements
The MEES regulations and EPC requirements can be complex, and property owners must understand their obligations to comply with the law. Here's a further breakdown of key aspects to consider:
Understanding Minimum Energy Performance Requirements
The minimum energy performance requirements under MEES are designed to ensure that rented properties meet a certain level of the minimum energy efficiency standards. The minimum EPC rating is currently band E, but as mentioned earlier, this will increase to band C in 2025 and band B in 2027.
Landlords must ensure that their properties meet these minimum requirements before granting new tenancies or renewing existing tenancies. Failure to comply with MEES regulations can result in financial penalties and legal action from local and enforcement authorities..
Making Energy Efficiency Improvements
Making improvements to your commercial or residential property can seem daunting, but it's essential to comply with MEES regulations and improve the property's energy performance. There are various ways to achieve improvements, ranging from simple measures like upgrading lighting to more substantial projects like installing renewable energy sources.
When considering energy improvements, it's crucial to assess the property's specific needs and prioritize improvements that will deliver the most significant energy savings. An accredited energy assessor can provide expert advice on the most cost-effective and impactful improvements for your property's energy efficiency.
Exploring Funding Options for Energy Efficiency Improvements
Funding can be a significant challenge for property owners. However, various funding options are available, including government grants, loans, and third-party funding schemes.
Government grants: The government offers various grants and incentives to support energy efficiency improvements in properties. These grants can help cover the costs of upgrades such as insulation, heating systems, and renewable energy technologies.
Loans: Several financial institutions offer loans specifically designed for energy efficiency. These loans often have favorable terms and can help spread the cost of upgrades over time.
Third-party funding: Third-party funding schemes allow property owners to implement energy efficiency upgrades with little or no upfront investment. These schemes typically involve a third-party investor funding the upgrades in exchange for a share of the energy savings generated.
Property owners should explore the available funding options from local government and choose the most suitable option for their particular circumstances.
Addressing EPC Exemptions and Compliance Issues
While most commercial properties require an EPC, certain exemptions apply in specific circumstances. Property owners should familiarize themselves with the exemptions and determine if their business premises or property qualifies for any.
If a property is exempt from EPC requirements, the landlord must obtain a valid exemption and register it on the PRS Exemptions Register. Failure by superior landlord to register a valid exemption can result in non-compliance with MEES regulations.
In cases where a property cannot achieve the minimum EPC rating due to technical or cost-prohibitive reasons, landlords can register an "all relevant improvements made" exemption. This exemption applies when all relevant energy efficiency improvements have been made, but the property still cannot reach the minimum EPC rating.
Ensuring Compliance with MEES Regulations
Compliance with MEES regulations is crucial for commercial landlords. Non-compliance can result in financial penalties of up to £5,000 per property and restrictions on letting the property.
Landlords should proactively assess their properties' EPC ratings and plan for necessary energy efficiency improvements to meet the minimum standards. It's also essential to keep records of all relevant documentation, such as EPCs, exemption registrations, and improvement measures undertaken.
By understanding and complying with MEES regulations, commercial landlords can contribute to the UK's energy efficiency goals, improve their properties' value, and provide tenants with comfortable and sustainable spaces.
MEES FAQS
What are the EPC rules for commercial property?
Commercial properties need an EPC with a minimum rating of E to be legally let. This will increase to C in 2027 and B in 2030. Landlords must commission an EPC from an accredited assessor and ensure their property meets the minimum standard before granting new or renewing existing tenancies.
What are the new EPC regulations for commercial properties in 2025?
From April 1, 2023, all commercial properties in England and Wales must have a valid EPC with a minimum rating of E to be legally let. This applies to new lets and renewals.
What is the EPC for commercial property in 2027?
The minimum EPC rating for commercial properties will increase to C in 2027.
What is the EPC for commercial property in 2030?
The minimum EPC rating will increase to B in 2030.
What will fail an EPC?
A commercial property will fail its EPC if it receives a rating below the minimum standard required (currently E, moving to C in 2027 and B in 2030). This usually means the building is not energy efficient and needs improvements like insulation, efficient heating, or renewable energy sources.
How much should a commercial EPC cost?
The cost of a commercial EPC varies depending on factors like the size and complexity of the building. Expect to pay anywhere from £75 to £1,000+. It's best to get quotes from several accredited assessors.
What does an EPC stand for?
EPC stands for Energy Performance Certificate.
Is an EPC a legal requirement?
Yes, an EPC is a legal requirement for most commercial properties when they are built, sold, or let.
What are the current MEES regulations?
MEES (Minimum Energy Efficiency Standards) regulations currently prohibit landlords from letting commercial properties with an EPC rating below E. This applies to existing leases, new lets and renewals.
What are MEES standards?
MEES standards set the minimum energy efficiency level for domestic and most commercial premises and private rented property. The current minimum EPC rating is E, rising to C in 2027 and B in 2030.
What is the difference between MEES and EPC?
An EPC (Energy Performance Certificate) is a report that assesses the energy efficiency of a property and gives it a rating. MEES (Minimum Energy Efficiency Standards) are the legal regulations that set the minimum EPC rating for rental properties.
