So with the Energy White Paper and recent consultation, the “EPC B by 2030” wind is very much in the government sails. The latest consultation (closing 9 June 2021) sets out plenty of government thinking on the road ahead, and particularly how the “MEES” regime needs to adapt to make it a success. Whilst there are plenty of talking points, here are 3 key takeaways for real estate professionals (plus one overall flag).
- EPC B by 2030, EPC C by 2027. The roadmap is clear. As a reminder, it is already unlawful to let F or G EPC rated non-domestic property, unless an exemption applies. This will apply to all lettings in April 2023. This regulation stands. However the threshold is set to leap forwards, and so now is the time to think ahead. Asset management plans will inevitably need to adapt, if they haven't already.
- EPC, no excuse. All landlords of rented non-domestic buildings are set to need a valid EPC at all times (as it stands, various triggers necessitate an EPC). This is set to align the EPC and MEES regimes, removing various ambiguities where a building can fall outside the MEES regime if it doesn’t have an EPC. It is worth noting too that this is set to include listed buildings, a long-standing point of debate.
- 2 year ”compliance windows”. Enforcement is currently at the point of granting a lease (then in April 2023, any subsisting lease in breach will be at risk of enforcement). However, the government is shifting from enforcement at the point of letting. From April 2023, the government proposes that enforcement applies at only 4 “junctures” i.e. not on the grant of a lease. Landlords will need to present a valid EPC to a database two years before the April 2027 (C) and April 2030 (B) target dates, and having submitted that EPC, will have a two year window to bring a building up to standard, if needs be. Why? It is easy to police. The key message? There are 4 important dates for the diary (1 April 2025, 2027, 2028 and 2030).
Finally it looks like one central current MEES principle will be changing. As it stands, MEES statutory liability rests squarely with the landlord, and it is unusual to see any agreed contractual shift in the burden of compliance (i.e. tenant rather than landlord paying for improvement works). It now looks like tenants will have to take on legal MEES responsibilities, with possible duties in respect of fit out and landlord/ tenant cooperation (mutual) in respect of overall compliance. As for the detail, that’s it at the moment. With the consultation closing in June, and the government’s response due by the end of the year, we won‘t have to wait long for more detail on that front. Building owners and occupiers alike will no doubt take note, and may indeed have something to say, now that the consultation is open...
However, the Government is committed to driving further action across the rented building stock and support the market in the transition to net-zero by setting a tighter long-term regulatory requirement.