What are the MEES Regulations?
From 1 April 2018, substantial changes are being introduced in relation to Energy Performance Certificates (EPCs) for private rented properties. As part of the Government’s continued efforts to improve energy efficiency standard in properties, the MEES Regulations 2015 will call for landlords to ensure that certain rented properties meet a minimum EPC rating of “E”. Failing this, the property will be regarded as “sub-standard”. Note that this minimum rating could be raised in the future, with a Government review expected in 2020.
The MEES Regulations provide that a landlord may not:
- grant a new tenancy or extend or renew an existing tenancy of a sub-standard property (both residential and commercial) on or after 1 April 2018;
- continue to let a sub-standard residential property on or after 1 April 2020; or
- continue to let a sub-standard commercial property on or after 1 April 2023.
In certain limited circumstances, a landlord may be able to claim exemption from the MEES Regulations. Where a valid exemption applies, the landlord must register the exemption on a national database. However, the exemption will only last for a period 5 years and the exemption will not automatically pass to a purchaser or future owner of the property.
Enforcement and penalties
For commercial properties, the MEES Regulations will be enforced by local weights and measures authorities (trading standards), who will have powers to impose civil penalties on landlords, set by reference to a property’s rateable value. The enforcement agent can serve a compliance notice where a landlord is suspected of being in breach of the MEES Regulations within the last 12 months. The enforcement agent may also serve a penalty notice if a landlord appears to be in breach, or has appeared to be in breach at any time in the preceding 18 months.
“The penalty for letting a sub-standard property for a period of less than three months will be the greater of £5,000 or 10% of the property’s rateable value, subject to a maximum penalty of £50,000. After letting the property for three months or more, the penalty rises to the greater of £10,000 or 20% of the rateable value, with a maximum penalty of £150,000. The enforcement agent may also impose a publication penalty on the landlord, resulting in information including the landlord’s address, the property address and details of any financial penalties, being published on a public register,” explains Verisona Law’s Head of Commercial Property, Julian De Giovanni.
Landlords who receive a penalty notice for a breach of the MEES Regulations will have the right to appeal against the notice at a tribunal and penalties can be suspended and withdrawn.
What to do next?
It is essential that landlords are aware of and advised as to the practical and legal effects of the MEES Regulations to enable them to prevent any breaches and subsequent enforcement actions.
It would also be prudent for landlords to revisit existing leases to evaluate the potential effects of the MEES Regulations on rent reviews, service charge, statutory compliance and repairing obligations.
Verisona Law’s Commercial Property team has the specialist knowledge and expertise to guide landlords through each stage of the incoming changes and to provide legal and commercial advice to landlords, tenants and investors as to the potential effects of the MEES Regulations.
- Acting for both land owners and property developers in relation to both residential and commercial development projects.
- Advising on the structure and content of the legal documentation associated with the sale and acquisition of development sites.
- Negotiating section 106 planning agreements.
- Negotiation of option agreements and conditional planning agreements.
- Plot sales / disposals.
Landlord and Tenant
- Advising both landlords and tenants in relation to the taking of and the grant of commercial leases of all form of commercial property.
- Dealing with subleases of commercial premises.
- Dealing with ancillary leasehold documentation such as licences to alter, change of use or licence to sublet.
- Advising in relation to variations of leases.
- Advising in relation to agreements for leases including development obligations.
Real Estate Finance
- Acting for both lenders and borrowers in relation to the taking and granting of security over all forms of commercial property.
- Acting and advising borrowers in relation to obligations in standard security documentation issued by both corporate and individual lenders.
- Perfecting a lenders security over the property at the Land Registry and Companies House.
- Dealing with commercial remortgages.
- Dealing with variations to existing security or substituted security.
- Acting for liquidators, administrators in bankruptcy in the sale of all forms of commercial property.
- Acting on and dealing with the sale of property under the Proceeds of Crime Act.
- Acting for buyers of commercial property from liquidators, administrators and trustees in bankruptcy.
- Acting for sellers and buyers of all forms of commercial investment property.
- Advising on the due diligence to be undertaken in connection with the acquisition of investment premises.
- Advising in relation to the VAT and TUPE implications arising out of an investment transaction.
- Advising buyers in relation to their ongoing liabilities under the individual leases.
- Advising on the property aspects arising out of the sale and purchase of businesses.
- Advising on the nature and extent of property warranties included within the legal documentation.
- Advising and dealing with obtaining the necessary consents for the transfer of any leasehold premises as part of the corporate transaction.
Property related Pension Schemes
- Acting for pension providers and individuals in relation to property related pension scheme arrangements.
- Advising pension companies in relation to the legal structure of property related schemes.
- Carrying out appropriate due diligence in relation to the property aspects of a pension scheme.
- Advising on and dealing with issues arising out of the transfer of assets from one pension fund to another.
Sales and Acquisition of Commercial Property
- Acting for sellers and buyers in relation to the sale and acquisition of all forms of commercial property