MEES for commercial buildings: the duty stopped waiting for a tenancy event

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 set a minimum energy efficiency standard for rented property. For non-domestic buildings that standard is an EPC rating of E, and the date most estates teams have not absorbed is 1 April 2023.

Before it, the requirement bit when a landlord granted, extended or renewed a tenancy. After it, the requirement applies to all privately rented non-domestic property, whether or not anything has happened to the tenancy at all.

Why that change matters more than it sounds

A duty triggered by a letting event belongs to the agent and the lawyer, and it surfaces when there is a transaction to hang it on. A duty that applies continuously belongs to whoever runs the building, and it surfaces only if somebody is looking.

In practice that puts it alongside the other things an estate has to be continuously able to evidence — the statutory inspections, the asbestos register, the water hygiene file — rather than in the letting file where it probably still lives.

• –A long lease signed in 2016 with no event since is still in scope.
• –A building whose EPC has since expired is a question nobody asked, because nothing prompted it.
• –An exemption registered years ago may have lapsed; exemptions are time-limited and sit on a register.
• –A building that was E when assessed may not be on a reassessment under a later methodology.

What to hold, per building

The useful test is whether you could answer, for every let non-domestic building, three questions without going to look.

• –What is the current EPC rating, and when does the certificate expire?
• –If it is below E, what exemption is registered, on what basis, and when does it run out?
• –If no exemption is registered, what is the plan and who owns it?

Most estates can answer the first for some buildings and none of them for all. That is the gap, and it is the same gap that makes estate-wide compliance reporting hard generally: the data exists, in different places, held by different people, with no single view.

Exemptions are the part that quietly expires

A building below EPC E can still be let where a valid exemption is registered. That is the route most estates with older stock are relying on, and it is the route most likely to have lapsed without anybody noticing.

• –Exemptions are registered, not assumed. A building that qualifies for one and has not had it registered is not exempt.
• –They are time-limited, so an exemption put on the register years ago may have run out while the letting continued.
• –They are specific to the property and to the landlord, which means a portfolio acquisition does not simply inherit them.
• –The basis has to still be true. An exemption on the grounds that works would not pay back is tied to an assessment that ages.

Which makes the exemptions register a compliance date like any other, and it belongs on the same list as the statutory inspection renewals rather than in a property file. An expiry nobody is watching is the definition of the problem this duty creates.

Where this is heading

Government has consulted on a future trajectory for non-domestic MEES, including implementation of a higher EPC B standard. Consultations are not law and the outcome and dates should be checked against the current pages rather than assumed, but the direction is settled enough to plan capital against.

Which is the practical argument for getting the register right now rather than when a deadline lands. A building you have a rating and an expiry date for is a building you can plan work on. A building you have to go and survey first is one you will find out about late.