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Energy Efficiency Standards Update

Overview

On 1st April 2018 the new Minimum Energy Efficiency Standards (MEES) deadline will arrive which could have a significant impact on commercial property owners.

Property owners must meet the MEES grade E on their Energy Performance Certificate (EPC) by the deadline of 1st April 2018 for new lettings, for all existing domestic lettings by 1st April 2020 and finally for all non-domestic letting by 1st April 2023.

Potential penergy-rating-graphenalties

After 1st April 2018 it will be illegal for any property owner to grant a new lease including renewals and extensions on properties that do not meet the required EPC unless energy saving upgrades are in place.

The penalty for renting out a property for a period of fewer than three months in breach of the MEES Regulations will be equivalent to 10% of the property’s rateable value, subject to a minimum penalty of £5,000 and a maximum of £50,000.

After three months, the penalty rises to 20% of the rateable value, with a minimum penalty of £10,000 and a maximum of £150,000. It is estimated that approximately 20% of non-domestic properties could be under the required E grade on their EPC.

The introduction of this energy act will have a large impact on the marketability of some properties as they will become much less attractive to future occupants. As the marketability of affected properties is diminished this could have a knock on effect on the valuation of such properties.

There is also a high likelihood that the MEES proposed for April 2018 will be raised in the future and the government is committed to implementing this policy, therefore having an energy efficient plan in place to improve affected properties will be crucial.

So what should property owners do?

Property owners can invest in the following energy saving improvements to improve their properties EPC rating and help to meet the upcoming requirements:

  • Cavity Wall Insulation
  • Roof Insulation
  • Pipework insulation
  • Duct insulation
  • Hot water cylinder insulation
  • Under floor insulation
  • Replacing ageing boilers
  • Draught proofing
  • Replacement glazing
  • Replace existing Halogen lighting with LED lighting
  • Solar water heating
  • High performance external doors
More information

For further guidance we would recommend referral to the Gov.UK website article offering guidance for landlords.

As always you can get in touch with BHIB, by emailing the blog author, Dan Harrison, or completing the contact form below: –

Dan Harrison Corporate Account Broker

Having started his career as an apprentice, Dan is now in his 5th year in the insurance industry, and joined us in 2016.

During that short time Dan has already made a big impression.  He has progressed to managing some of our larger clients, is part of a team that looks into the development of our IT platforms, and has also passed a significant module as he studies towards his Diploma in insurance.

In his spare time. Dan is a keen rugby player and a supporter of the Leicester Tigers. He also has his hands full looking after a boisterous Great Dane puppy that (at the time of writing) has an Instagram following of almost 2,500 people!