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Attention all landlords! New minimum efficiency standards

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The Energy Act 2011 contains a number of provisions which will affect owners and occupiers of property. Probably most significant are the proposed minimum energy efficiency standards or MEES. From April 2018, the proposed legislative changes would make it unlawful to let residential or commercial properties with an EPC Rating of F or G, the two lowest grades possible from an EPC
rating. This change could allow for an unfavourable knock-on effect for valuations and dilapidation
assessments for properties falling below the minimum standard.

The current state of affairs

“Research by Cushman & Wakefield’s Project Management and Consultancy team shows that nearly 20% of commercial property buildings currently fall into the ‘F’ or ‘G’ categories – meaning they will need improvement before 2018. A further 19% are rated ‘E’ and sit just above what will be the legal cut off. In total, nearly 40% of all properties could face a significant performance risk.”
(Source: cushmanwakefield.co.uk)

There is a high likelihood that the minimum energy standards proposed for 2018 will be raised in the future and Government is committed to implementing this policy.

Where the EPC Rating is “F” or “G” (or is at risk of a low rating) an “Energy Efficiency Plan” should be put in place to improve the energy efficiency of the property. This should include assessing the costs and benefits of improving energy efficiency and pitting these against options to market the property and/or to re-gear the lease. Š

Energy efficiency improvement works would need to be implemented before April 2018. It should be reiterated that any property below an EPC rating of “E” after this date cannot be let lawfully. ŠThere are financial penalties for non-adherence to the new legislation – although some exceptions are available.