Guidance for Tenants on the Minimum Energy Efficiency Standards
On the 26th March 2015, the Energy Efficiency (Private Rented Sector) (England and Wales) Regulations passed into law. Whilst compliance with the minimum energy efficiency standards (also known as MEES) is the responsibility of your landlord, it is important to consider the impact it may have on you or your business. From 1st April 2018 it will be unlawful for your landlord to renew your lease if the property has an Energy Performance Certificate below a Band ‘E’ rating.
Domestic Tenants
For domestic properties, there are two distinct elements:
1. From 1st April 2016, you have a right to request your landlord’s consent for energy efficiency improvements to the property. You must:
1. Be able to evidence that energy efficiency improvements will be generated by the proposed works;
2. Have proof of funding.
If you meet these two criteria, your landlord won’t be able to unreasonably withhold consent to the works being carried out. They may however propose alternative improvements.
2. From 1st April 2018 your landlord won’t be able to renew you lease or grant you a new lease if the property has a minimum energy standard of E or above.
Commercial Tenants
For non-domestic properties:-
1. From 1st April 2018, your landlord won’t be able to grant you a lease renewal or a new lease unless the property has an EPC rating of Band ‘E’ or above.
2. From 1st April 2023, your landlord is obliged to ensure that the property meets the Band ‘E’ rating
Issues to Consider
During the term of a lease
If you rent a commercial property and your lease extended over the 2023 compulsory deadline, your landlord may contact you with a view to carrying out the necessary improvements to the property. It is unlikely that your lease will provide for the introduction of MEES and therefore, you are well advised to consider the following:-
1. What rights does the Landlord have to access the property?
2. Who will be responsible for the cost of the repairs and any damage that may be caused to the property?
3. Could your original Lease be drafted in such a way that you are responsible for the improvement works that need to be carried out?
The legislation may also impact you if you have a right to assign or sublet your property within the terms of your existing lease. After 1st April 2018, you will be expected to comply with the legislation and ensure the property has an EPC of Band E or above before you can enter into an assignment or sublease. You may find that your landlord’s consent to carry out improvement works is required and even if the terms of your lease allow you to obtain your own EPC certificate or carry out the necessary improvements, it may be that you are responsible for the costs.
When entering into a new lease
Whilst the incoming legislation makes landlords responsible for carrying out and paying for the necessary improvements, it is important to consider that landlords may wish to pass the cost and responsibility onto their tenants when entering into new leases. This may be a direct obligation to maintain the property’s EPC banding or alternatively, the costs could be incorporated within a service charge or rent review provision.
Action to take now
As the legislation makes landlords responsible, it may be that there is little immediate action for you to take. That being said, it is important to be aware of the upcoming changes so that you can anticipate how the changes may affect you in the future. We would be happy to explain the ramifications of the upcoming legislative changes in more detail with you and discuss the best approach for your property.
We would be happy to explain the ramifications of the upcoming legislative changes in more detail with you and discuss the best approach for your property. For more information contact Katy Washington or Kirsty Kelshaw
