What is significant about 1 April 2025? It will see us mark the second anniversary of the recent changes to Minimum Energy Efficiency Standards ("MEES") affecting corporate occupiers. Scarlett Wheeler, Head of Construction at Lewis Silkin revisits the stricter energy ratings for commercial buildings, the ongoing regulations, and the responsibilities of landlords and tenants regarding compliance.
What Do Corporate Occupiers Need to Know?
In the Global Alliance for Buildings and Construction and UN Environment Programme's 2024/2025 Global Status Report declared that:
"despite modest advancements, the sector is not yet on track to align with net zero carbon and climate resilience targets by 2050, as progress remains slow and fragmented."
In the quickly evolving modern landscape of sustainability,
green leases, and the Government's Net Zero policies hitting
the headlines, naturally reconsidering MEES needs to be on the
agenda.
It is therefore apt as we commemorate this second anniversary of
MEES to revisit what these changes mean for corporate occupiers and
to consider if one has got all of their ducks in a row?
What Has Changed?
MEES regulations apply to commercial buildings with a valid Energy Performance Certificate (EPC) rating, unless exempted (most exemptions apply to listed buildings, leases under six months, or over 99 years).
Since 1 April 2023, it has been illegal to let such properties with an EPC rating of F and G.
It is anticipated that properties will need to have an EPC rating of at least C by 2027, followed by B in 2030. The precise timings are yet to be confirmed, with the intention of affording landlords and supply chains sufficient preparation time and adapting to Governmental targets on Net Zero and energy efficiency.
What Is Being Considered?
There are several key matters currently under consultation that corporate occupiers should keep an eye on. These include:
- Continuous EPC Validity: Properties would need to maintain a valid EPC throughout the tenancy, not just at the point of letting.
- Onus on Tenants: New duties could be imposed on tenants to share responsibility for MEES compliance, potentially through cooperation requirements.
- Database and Enforcement: There are plans to introduce compliance databases and give local authorities stronger enforcement tools, including penalties and inspections.
What Does This Mean in Practice?
While MEES imposes obligations on landlords, there are consultations about also imposing duties upon tenants. Corporate occupiers are therefore indirectly affected through lease terms, potential costs, and operational impacts and can begin futureproofing today.
How to stay ahead!
- Early engagement with landlords and proactive planning can help avoid disruptions and enhance your business's sustainability credentials.
- Similarly, if you are about to enter a lease, ensure the lease specifies who is responsible for MEES compliance (e.g., landlord upgrades). You could also request exclusions or caps for MEES-related express service charge contributions unless these necessary improvements directly benefit you.
- Lastly, if the property is subject to an exemption (of which there are many), make sure to request proof and keep a record of it.
Noting that the building and construction sector's emissions currently represents 34% of emissions, it is imperative that we all continue to play our part in the journey towards improving energy efficiency in commercial buildings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
