MEES Regulations – Are You Ready For It?
Key Contacts: Steve Morris & Gareth Baker
Author: Joshua Prior
Restrictions on UK property law tightened recently with the Minimum Energy Efficiency Standards (MEES) regulations (the Regulations) reaching their next step. As the name suggests, the MEES regulations look to improve the energy efficiency standards of UK domestic and non-domestic rented properties. Per UK law, properties are required to hold a valid Energy Performance Certificate (EPC) which, for rented properties, now needs to be at the level of E, or higher (up to A). The goal of these regulations is to ensure that properties require as little heating as possible, thereby using less energy and the Landlord spending less money. Whilst the UK Government is investing in renewable energy infrastructure, an alarming number of buildings still use traditional fossil fuels to heat the property and with an increase in energy efficiency, the use of these damaging carbon-based fuel sources can be reduced.
This article will discuss what the regulations and the new changes are, who they affect, the possible exemptions and consequences, and a discussion of how these reflect a wider social and economic shift within the UK economy. We will be discussing specific rented commercial properties within this article. If you would like to speak to anyone about any of these topics, please contact the Real Estate Team.
What are the Regulations?
Stemming from the Energy Act of 2011, the MEES regulations were passed in 2015 and came into force in 2018. The regulations initially meant that the Landlord of commercial properties could not issue new leases to tenants if the EPC was lower than an E – unless the Landlord had a valid exemption.
What are the Consequences?
The Regulations permit a two-pronged penalty for those Landlord which do not comply with the MEES Regulations. The first is a financial penalty on Landlords who do not comply or do not register an exemption, and the second is the reputational damage of the Landlord.
Acuity Law’s Real Estate Finance team, who act for both borrowers and lenders have seen instances where banks will not be willing to offer a loan to a potential customer where that loan would be secured over a substandard property. Whilst the fines are may not be as effective, the threat of not being able to carry out business operations as a result of a substandard property will surely encourage Landlords to comply.
How can Acuity help?
Acuity Law have a large and experienced real estate team who focus on development and portfolio work. We work with many clients in the manufacturing and industrial sections and these are the sectors which are most likely to be hit the hardest by these regulations due to old warehouses and factories not being insulated properly, or insulated with harmful substances such as asbestos.
If you have any concerns that your properties may be substandard, or you are struggling to understand the regulations, please contact our Real Estate team who will be more than happy to talk you through your options and support you through the process.
How do the MEES regulations reflect larger trends?
We have seen a dramatic shift in the UK economy away from fossil fuels and towards greener, renewable energy sources. This shift is exemplified by the MEES Regulations which seek to ensure that carbon footprints from buildings and energy supplies is the lowest it can be. In the coming years and decades the Regulations set out a timetable for increasing the minimum EPC a certificate can hold.
This is reflective of the larger ESG trend towards companies and businesses adoption better environmental, social, and corporate governance policies. At Acuity Law we are no stranger to these trends, adoption many ESG policies ourselves with the help of our very own ESG committee.
Further, Acuity Law have a specialist renewable energy infrastructure sector team, spanning our Corporate, Commercial, and Real Estate teams. If you are interested in developing your own renewable energy infrastructure, please come and talk to us.
If you would like to speak to us about any point in these articles, whether on the MEES Regulations or the wider shift to ESG policies, please contact us at [email protected].