Blog - 14/07/2021
How energy efficient is your commercial property? Government consultation outcome will set new targets
Responses to the MEES Consultation designed to reduce energy consumption in and carbon emissions from commercial buildings in England and Wales, closed on 9 June 2021. It’s been quite a journey; in 2019, the Government started a consultation setting out its intention to raise the minimum standard of Energy Performance Certificate (EPC) from “E” to “B” by 2030. The support of this consultation was encouraging so much so that this further consultation focuses on how to practically implement the EPC “B” rating.
The consultation envisages a phased implementation with an interim milestone of an EPC “C” rating by 2027 culminating in an EPC “B” rating by 2030. Imposing an interim milestone strategy is to avoid a last minute rush and to encourage landlords to implement change by planning improvements in advance. The milestones are preceded by a two-year compliance window which begins by landlords either demonstrating that the threshold has been achieved or registering an exemption.
The property industry raised concerns over the implementation strategy and the government in the consultation endeavours to resolve concerns, for example:
- The Government intends to provide greater clarity in respect of older buildings and listed buildings. The consultation has proposed that all let listed buildings should be required to have an EPC. However, where the proposed works requires planning consent and it cannot be obtained, landlords will be able to apply for an exemption from the MEES thresholds.
- The Government proposes to reduce the difficulties with shell and core space by allowing landlords a 6 months exemption period. This means tenants will have time to complete their fit-out enabling the energy threshold to be met so the landlord is then able to legally grant a lease of the property.
Landlords would be minded now to review existing properties to gauge which ones will require remedial work to bring them up to standard and to start budgeting. Indeed the financial costs of implementing these changes was reflected in the bruising downgrade of two of Britain’s biggest landlords, British Land and Land Securities. Analysts at Jefferies believe that both were vulnerable to spiralling costs to make their premises greener and more energy efficient under forthcoming law reform.
The energy sector is high on the government’s agenda, and rightly so. There are two other consultations in progress. One in respect of a new rating system devised for measuring and comparing the theoretical energy performance and the building’s actual energy performance of large (over 1000ms) commercial buildings which draws largely on the successful NABERS scheme in Australia. The other on mandatory non-financial reporting for large businesses.
We will continue to monitor developments. In the meantime if you have any queries, please contact Joanne McIvor or any member of the Property team.
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