Rapid reaction: MEES interim response – key changes for the non-domestic private rented sector

The Government has yesterday published a long-awaited interim response to its 2019 and 2021 consultations on strengthening non‑domestic Minimum Energy Efficiency Standards (“MEES”) in England and Wales. While some questions remain unanswered, this gives landlords some much needed clarity regarding future MEES compliance and in particular on the minimum Energy Performance Certificate (“EPC”) rating that their commercial stock must achieve.

What has been said?

1. EPC B deadline extended

The deadline for private rented buildings to achieve a certification of EPC B or higher has been extended from 2030 to 2031. The current requirement is EPC E or higher.

2. Minimum size

   The 2031 EPC B requirement will only apply to buildings of over 1,000 square metres in England and Wales, and smaller buildings will continue to be subject to the current minimum of EPC E.

3. Interim changes scrapped

   The proposal of a 2027 interim EPC C milestone will not be implemented, meaning a significant extension to the compliance timeframes previously proposed.

4. Flexibility remains

   The Government intends to maintain existing mechanisms such as the 7-year payback test and exemptions to ensure only “improvements that are practical, affordable and cost-effective will be required”. This demonstrates an overall appreciation for the practical and financial pressures these changes will create.

Remaining uncertainty

The interim response confirmed that secondary legislation will be required to implement these changes, but no timeline has been provided for when this can be expected and the time it takes to pass secondary legislation can vary greatly depending on political will to make changes.

Other issues covered by the 2021 consultation, such as the suggestion of introducing obligations on tenants regarding MEES compliance, were not addressed and so remain uncertain. The Government has stated that this specific change would require primarily legislation, but no further detail has been provided in this interim response.

Key takeaways

This interim response demonstrates that the push towards net-zero remains a key priority for the Government, but that intention is to take a practical approach to not overburden businesses.

Commercial landlords will welcome the certainty that this interim response helps provide, alongside the time extension for making (potentially) expensive improvements. The removal of the EPC C 2027 stopgap may also mean that improvements are more likely to be completed in one larger phase, rather than over two periods.

SMEs and landlords of smaller properties will also appreciate this interim response, thanks to the introduction of the 1,000 square metre threshold. Existing EPC E requirements must still be met, but the Government has stated that this change is intended to provide a “fair and proportionate timetable” while supporting business investment, reducing exposure to volatile energy prices, and strengthening UK energy security. However, caution should be taken in relying on the EPC E requirement for the long-term as the overall trend towards net-zero continues.

We await the full consultation response. Please get in touch if you would like to discuss the potential impact of the MEES interim response.