UK landlords at risk of non-compliance with energy efficiency regulations


New data suggests that thousands of commercial buildings could be in breach of legislation to be enforced from April this year.

Building simulation firm Arbnco has released data stating that thousands of commercially rented UK properties have poor energy efficiency ratings, putting them at risk of non-compliance of the new Minimum Energy Efficiency Standards (MEES) rules.

Research warns that 17 % of commercial buildings in England and Wales have energy performance certificates (EPC) rated F or G. Properties ratING below an ‘E’ cannot be rented out to new tenants or have their existing tenancy contracts renewed, unless the landlord registers an exemption.

Landlords with legal EPCs of F or G logged on the Landmark database are at least aware of the problem. Arbnco data states there are many property owners who are currently unaware of their EPC status.

According to an EPC simulation by Arbnco of more than 3600 buildings, nearly one in five buildings has dropped to a lower banding. Many buildings moved from a passable E or D rating to a sub-standard F or G, up to £130bn to the UK market could be at risk.

EPC ratings for every building must be replaced every 10 years and SBEM (the software tool to calculate ratings) is updated every two years, in line with regulations.

According to Arbnco founder Simon Wes, this means it effectively gets harder for buildings to maintain the same EPC standard over time. “In simple terms, that means it gets harder to get a good rating every time there is a new release,” he says. “This could cause property owners to run into problems not only when an EPC is up for renewal after 10 years, but if a property owner comes to retrofit or sell their property”.

Extensive refurbishment of a building can trigger the need for a new EPC. Without the required energy efficiency upgrades, a downgrade could lead to a landlord losing the rights to rent.

West further states: “Lots of lendees will be small commercial property owners that have mortgages.”

“If come April they can’t re-let the building because of MEES, and they need to spend to retrofit, they might not have the funds to do that. There is a real risk that assets won’t generate an income and that they haven’t got the financial support to see them through it. So that property could get repossessed, and that’s a really big risk for the banks and the lenders.”

Caroline Hill, head of sustainability at Landsec: “The big question for landlords will be do you upgrade to just get a D or do you go for best in class?”

“But that is where the policy environment has a role to play. If the government was bold enough to release a timetable that said ‘this year the minimum standard will be strengthened’, then it would be easier for businesses to make the investment now.”

To read more about MEES and the specific energy efficiency guidelines and deadlines, visit the GOV.UK website.


Image credit: International Energy Agency