On 1st April 2018, the Energy Efficiency (Private Rented Sector) (England and Wales) Regulations 2015 will come into force.

The regulations will herald a significant change for the commercial property market and will impose Minimum Energy Efficiency Standards (MEES) on property owners.

The backdrop to this change results from UK Government carbon reduction targets. Guidance from the Department for Business, Energy and Industrial Strategy (DBEIS) indicates that the energy used to power commercial property in the UK amounts to 12% of the UK’s total emissions.

The regulations are designed to reduce energy emissions and ultimately create a new energy-savvy property market that gives greater credence to energy efficiency. Whilst landlords are the obvious audience for these changes, it should also be noted that existing tenants seeking to assign or sublet a lease will also be caught by the regulations.

When the regulations come into force in April, it will be illegal to rent out any property below the energy rating of ‘E’. Currently, the Energy Performance Certificate (EPC) is classified on an A-G scale, meaning any property in the F or G category will be classified as ‘substandard’. It is estimated that only 20% of non-domestic properties are categorised below the ‘E’ rating.

It is important to note that the 2018 deadline only concerns the granting of a new lease or the renewal/extension of an existing lease. From 1st April 2023, all other commercial property leases (existing and otherwise) will be hit by the regulations automatically.

To find out more information about the regulations, including possible exemptions, consequences for non-compliance and crucial steps for landlords, please visit our resources page.