Minimum Energy Efficiency Standards – How Can Landlords Prepare for the Changes?

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16 August 2021

Following the closure of the MEES consultation in June 2021, what action should commercial landlords be taking right now?

The property sector has a lot of work to do to reach the minimum Energy Performance Certificates (EPCs), according to property consultancy Cluttons. In terms of how this will impact landlords, Cluttons has looked into property owners' biggest concerns and provided recommendations and advice for those who may be affected.   

Property Owners Should be "Mindful" Following Closure of MEES Consultation

The MEES Consultation was designed to reduce energy consumption and carbon emissions related to commercial buildings in England and Wales.  

In 2019 the government intended to raise the minimum standard of EPCs from the current minimum “E” rating to a “B” rating by 2030. By 2027 an EPC rating of “C” is proposed, preceded by a two-year compliance window where property owners must either demonstrate that the threshold has been achieved or that they have registered an exemption.

“Although 2027 and 2030 seem a way off, this is only one cycle in property, and many things can change that affect and delay construction. Property owners must get a handle on their portfolios now to build a plan that is practical, cost-efficient and allows them time for delays and complicated work,” says Jonathan Rhodes, Head of Commercial Valuations at Cluttons.   

Looking into what impact the MEES consultations will have on property owners and their biggest concerns, Rhodes and Rob Burke, Director of Building Consultancy & Project Management at Cluttons, have provided recommendations and advice for landlords:

• Start to review existing properties to analyse what work will be needed to meet the various phases of compliance in the MEES consultation.  
• Budgets and work plans need to be put in place, particularly for landlords that own multiple older properties, as it could be that some of these could obtain an exemption.  
• When budgeting, consider likely future rises in costs when planning now  
• Landlords should watch out and feed into the following two consultations on energy performance – one will look at a new rating system to measure and compare potential energy performance vs actual performance for large commercial buildings; the second will focus on mandatory non-financial reporting again for large businesses.  
• Be mindful that many existing EPCs may be old and wrong, so re-running them using better software will provide greater accuracy. It will give a more transparent picture of the actual work needed in the drive to net-zero.  
• Use an expert property consultant to analyse portfolios and advise on strategy, investment and activity required to meet targets.  

Burke commented: “Landlords must also be mindful that there are opportunities to improve many older EPCs by reviewing these and re-running them using current updated software. This will provide greater accuracy, often a better rating and a more transparent picture about the real work that needs to be done in the drive to net-zero.”

Rhodes concludes: “In addition, it is crucial that all stakeholders work together to reach the right compliant levels and move the dial significantly for energy performance in the property industry. In the absence of central and local government enforcement and any meaningful incentivisation, we believe that lenders could hold the key.

"By working with landlords to support them in their drive for EPC compliance, to favourable lending criteria for greener buildings, the banks can be both the carrot and the stick to a successful private sector drive for greater energy efficiency.”

Picture: a photograph of a modern commercial building 

Article written by Ella Tansley | Published 16 August 2021

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