Changes to the EPC rules

What do non-domestic Landlords need to know ahead of 1 April 2023?

Under current Minimum Energy Efficiency Standards (‘MEES Regulations’), a Landlord cannot lawfully grant a lease of a non-domestic property where the property does not have a valid EPC with a rating of F or G. This applies to both brand-new leases and the renewal of existing leases.

The MEES Regulations were initially introduced in 2013. These have since been reviewed and from 1 April 2023, it will be unlawful for a Landlord to grant a further lease or continue letting a non-domestic property pursuant to an existing lease if that property has an energy rating of F or G. 

Looking further into the future, the government has plans for the minimum ratings to increase over the next 7 years. From 1 April 2027 the minimum rating required to lawfully let non-domestic properties will by C, and by 1 April 2030, a rating of B. Landlords as well as potential buyers of non-domestic properties should therefore be mindful of the future increases as the costs and inconvenience of works over the years could be significant. 

Leases should also be drafted and interpretated carefully to ascertain whether the relevant provisions in a lease allow the Landlord to recover the costs of improvements from the Tenant.

Where a Landlord does not comply with the above requirements, they could be subject to a penalty based on 10-20% of the rateable value of the property. This is subject to a minimum fine of £5,000 and a maximum fine of £150,000. Enforcement is carried out by local Weights and Measures Authorities. 

There are some exceptions. Some properties do not require an EPC at all. Other properties that do require an EPC, but do not meet the minimum rating requirements may not need to carry out works to improve the EPC rating if they can prove and rely on a legitimate reason as set out in the MEES Regulations. In that scenario, a Landlord must register the property on the ‘Private Rented Sector (PRS) Exemption Register’. Only then will a Landlord be exempt from the minimum EPC rating requirements and enforcement action. 

If you are a Landlord and do not have a valid EPC, or an existing EPC with a rating of F or G, we strongly recommend that you instruct an energy assessor to carry out an assessment of your property as soon as possible. They will then be able to advise on any works required to improve the EPC as necessary as well as any exemptions you may be able to rely on.

To talk to someone in the Commercial team about these changes and how they might affect your property, please give us a call.

Kirsty Grimley, Solicitor

kgrimley@mayowynnebaxter.co.uk
0800 84 94 101