The future trajectory of the minimum energy efficiency standards (MEES)

20th January 2020

Our in house EPC Assessor Richard Brown updates what’s currently happening on the topic of energy efficiency in buildings and MEES.

The Department for Business, Energy & Industrial Strategy (DoBEIS)’s consultation on the future trajectory of the MEES has now closed, and we wait to see what the industry’s response has been, and how this will be interpreted by Government.

MEES currently regulates the non-domestic rented sector and stipulates that a Landlord cannot let or renew the lease on its building if the property has an Energy Performance Certificate (EPC) with an F or G rating. There are certain exemptions.

The Government has always been keen to show its green credentials, so has now sought comment on its proposals to further tighten MEES and require properties to have a rating no lower than a B by 1st April 2030.

Whilst this would no doubt delight a large element of the climate change lobby, Government has to balance this with business and industry’s concerns at the cost of compliance; this is before we factor in the different political parties positions on the climate change debate.

As such, the Government has also put forward a softer alternative of requiring a C rating by April 2030, but as usual, both options are likely to be seen by the different sides of the argument as an unacceptable compromise.

The UK has taken big strides to reduce its carbon footprint, mainly through the reduction and phasing out of coal fired power stations, however the more sensitive areas such as transport, particularly air travel, have remained largely untouched. Is property seen, then, as an easy target?

The DoBEIS estimates that the savings to business by 2030 of implementing a B rating would be approximately £1billion, but at a cost of £5billion of investment. The economy, it is estimated, would benefit by around £6billion, but, as with all large infrastructure works such as HS2, Crossrail, etc, both the benefits and the costs are far harder to calculate, with the later usually making the headlines.

Hitting a B target in 10 years is optimistic, so the lesser C may well be adopted, but this will still require enormous investment by landlords to upgrade their properties. The easy target items of lighting and heating have by and large been actioned, so it is the more costly structural and invasive improvements that will now need to be addressed.

The impact on the property investment sector will be substantial, and it will no doubt put pressure on parties to re-open the debate as to whether all of these costs are borne by landlords, or should tenants be contributing? The forward thinking among both will no doubt see the benefits not just globally, but to their own costs savings, so will act, but the majority of property at the lower end of the EPC ratings scale tends to be occupied by tenants who are more concerned at running their business, than global temperature changes.

The get out for both sides may by the Government’s caveat in the consultation that recognises not all property can achieve the required rating, and could therefore allow landlords to continue to let property, providing they can show that they have taken all reasonable steps to implement a cost effective package of improvements. It is also proposed that the existing exemptions would remain in place.

The debate will continue to rage, and we wait to see whether the Government seeks a single or phased implementation date, and at the B or C level

To find out more, feel free to contact us, give us a call on 0115 958 8599 or email [email protected].