Minimum Energy Efficiency Standards (MEES) are regulations requiring a minimum energy efficiency standard to be met before properties in England and Wales can be leased or sold. The standards are measured by an energy performance certificate (EPC) rating. According to Chesterfield Borough Council, EPC ratings range from A (most energy efficient) to a G (least energy efficient); they are valid for 10 years; and landlords can be fined if they don’t obtain an EPC when they need one.

Leased commercial properties in England and Wales must have an EPC rating of E or higher, except where certain exemptions apply. This minimum rating requirement will go up over time, according to Retail Gazette, which reports that the government will ban commercial properties from being rented out unless they carry a minimum energy performance rating of “C” by 2027 and “B” three years later. According to Gordons LLP, landlords must register for the exemptions as they are not automatic; the exemptions last for five years but are personal to the owner. Thus, if the landlord sells the property during the five-year period the new owner would have to re-register for the exemption. Property Reporter states that the maximum penalty for commercial property noncompliance is £150,000.

Savills research indicates that around 73 percent of London office space (with a registered EPC rating) currently have a rating of EPC D or lower and his percentage jumps to 96 percent, when considering premises with an EPC rating of “C” or lower. The Telegraph (citing data from Savills) writes that new energy standards will make 91 percent of all retail space including high street stores and shopping centers across UK city centers unleasable by 2030 without urgent and costly action; and it will cost between £55bn and £90bn to upgrade retail stock across Britain, with around £10bn needed in London alone. Financial Times reports that the City of London is planning to fast-track applications to convert unused older offices for new purposes such as hotels to avoid buildings remaining empty as stranded assets. Older buildings that do not meet tightening environmental standards are likely to struggle to attract tenants, as companies switch to hybrid working and property owners face mounting debt costs amid rising interest rates, according to FT.

Last Updated on June 24, 2023 by Ramin Seddiq