In September 2023, notwithstanding the Prime Minister’s restating of the UK’s commitment to delivering on its climate goals and achieving net zero by 2050; it was announced that any policies to tighten the Energy Performance Certificate (EPC) requirements for residential properties to upgrade the energy efficiency to have an EPC rating of C from 1 April 2025 were to be scrapped. Instead, the Government would continue to encourage households to upgrade their property's energy efficiency, where they can.
For the commercial property sector, the current MEES rules remain in place; since 1 April 2023 it has been unlawful for landlords to grant a new lease of, or continue to let property, where the EPC rating is below an ‘E’ without carrying out improvements and/or registering an exemption, which is not a long term solution to improving the energy efficiency of the premises, provides, subject to meeting specified criteria, a temporary 5 year reprieve.
The future proposals, outlined in the 2021 Consultation are looking to an EPC rating of C by 1 April 2027, rising to a B by 1 April 2030. However, there is now some uncertainty about whether the intended trajectory for commercial properties will also be abandoned or delayed. There was no reference to the MEES regime nor the Government’s plans in the King's Speech (November 2023).
The Government has confirmed in its response to the Climate Change Committee’s 2023 Annual Progress Report that it has reviewed the responses to the 2021 Consultation and will be 'updating' the proposed timelines for minimum EPC levels for commercial properties, to allow 'sufficient lead in time for landlords and the supply chain'. This may indicate that the proposed trajectory (EPC rating of C by 2027 and EPC rating of B by 2030) will have to be revised. However, there is no certainty, and with no publication date for any updated government policy, the position remains unclear.
Notwithstanding the ongoing uncertainty and lack of clarity, both investor landlords and tenants (who may look to sub-let in the future) should continue to review their portfolios in light of the potential increasing MEES trajectory and factor in any necessary improvements to meet those standards. Non-compliance can result in fines and reputational damage for the landlord.
See here for some further commentary.
