The Minimum Energy Efficiency Standard (MEES) will take effect in April 2018, and applies to all privately rented residential and commercial properties.
Landlords will not be able to offer new tenancies in buildings that have an Energy Performance Certificate (EPC) below level E. Currently, around 20% of existing commercial properties in the UK do not meet this standard.
The EPC system rates building from A to G, so an E rating is far from the highest a building can achieve.
Noncompliance with the regulations could mean that landlords face fines as high as £150,000. As part of a commercial mortgage application, lenders may want to see the EPC certificate for the property being purchased and may not approve the application until the building achieves at least an EPC of level E.
The regulations will focus on the energy consumption of buildings and could make high EPC-rated properties attractive to businesses wishing to be associated with environmentally friendly policies. Landlords may be able to charge higher rents for high-energy efficient buildings.
Lord Deben, chairman of the Committee on Climate Change, has criticised many home builders for not constructing energy efficient homes. He said that builders are “cheating the public” by forcing them to pay high energy bills.
As Lord Deben and other experts bring to the fore the issue of energy efficient buildings, both residential tenants and commercial tenants may begin to insist that they will only rent properties with a high EPC rating.