Energy consultation on emissions strategy

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Borneo Martell Turner Coulston

1st January 2020

Legal Briefing

Borneo Martell Turner Coulston

By Mohammed Rahman

Borneo Martell Turner Coulston

THE UK Government has put forward a consultation relating to commercial property/non-domestic property in England and Wales and the Minimum Energy Efficiency Standards (MEES) which may come into effect by 2030.

The consultation is as result of the Government's commitment to have zero emissions by 2050 and to follow its clean growth strategy.

The Government's preferred target for non-domestic/commercial property is that an Energy Performance Certificate (EPC) shows the energy rating at a band B by 2030. There is also a proposal that band C may be used as an alternative. That preferred may well change under the new Government, as may future plans in relation to EPCs and MEES, although its impossible to say at this early stage.

The current proposal is that the EPC band B target could reduce the UK emissions by 2030 with businesses saving up to £1 billion per year in energy bills. The consultation closes on 7 January 2020.

Landlords will already be aware that MEES took effect for both domestic and non-domestic property from April 2018. Since the change took effect in 2018, landlords have not been allowed to grant any new tenancies or extend or renew any existing tenancies of a property, which had an EPC rating of F or G. The same restriction will apply to all properties with already existing leases, from April 2023.

Now, the Government is proposing that all non-domestic, privately rented property should achieve a minimum energy efficiency standard of either EPC band B or band C by 1 April 2030. This is on the proviso that any measures taken property owners to achieve this energy efficiency standard is cost effective.

The Government is seeking views on whether to legislate for a single 2030 implementation date. This follows a similar model to the implementation that the Government introduced in 2018 and as a result, landlords may be prevented from creating any new tenancies or renewing existing leases beyond a certain date if the property will not meet the minimum requirement of either EPC band B or C in April 2030.

In the event that the Government does push forward with these proposals and makes it a legal requirement, then commercial property owners will need to consider what works they will need to carry out on their properties to be able to rent them out in the future.

It is estimated that approximately 85 per cent of existing commercial buildings in England and Wales would need improvements to meet the required standard if the Government was to adopt an EPC band B target. It is the Government's intention that responsibility for the energy efficiency of the building will lie with the landlord, however, they are considering scenarios in which a tenant has genuine requirements to carry out improvement works at the building and the tenant is willing to fund these improvements. For example, the Government are considering that if a tenant requires specific equipment for their business, e.g., specific air conditioning or specific lighting, whether or not the responsibility of the energy efficiency should fall on the tenant in these scenarios.

As suggested, the consultation closes on 7 January 2020, however, with a new Government being formed, there may be further proposals put forward in the near future.

If you would like to respond to the Government consultation, you can do so by sending an email to: businessenergyuse@beis.gov.uk

If there are any commercial /non-domestic property owners or landlords who require further information, it would be advisable to discuss matters with a commercial property agent with regard about potential works required to their properties. Alternatively, if you require further assistance and legal advice in relation to this matter, or any commercial property transaction, contact Mohammed Rahman at Borneo Martell Turner Coulston Solicitors at mohammed.rahman@bmtclaw.co.uk or call 01604 622101.