At last the Energy Efficiency Regulations have passed through parliament, so now landlords can start to put in place strategies to mitigate the risks

Emma Hoskyn

The property industry is breathing a collective sigh of relief that the Energy Efficiency Regulations 2015, or minimum energy efficiency standard (MEES) as they are otherwise know, made it through the parliamentary process before the government was dissolved for the election at the end of March. These long-awaited regulations set the standard for the minimum EPC rating (level E) which will be required from April 2018 onwards.

The reason for the big sigh is that for the last four years, many in the industry have been preparing for MEES based on an uncertain expectation that it would become law - not an ideal basis for robust decision making. Now we have certainty in the regulations, landlords can truly start to think strategically about the best way to manage EPC risk in a portfolio or at an asset – be it commercial or residential. And those still with their head in the sand are going to start getting hot and flustered.

Now we have certainty in the regulations, landlords can truly start to think strategically about the best way to manage EPC risk in a portfolio or at an asset

The aim of MEES is to improve the energy efficiency of the UK building stock and I hope it does go a significant way to doing this. However, MEES is not a panacea and to make it workable in the UK’s property market is a tricky undertaking which has resulted in a number of “exemptions” being written into the regulations. This means that landlords and tenants will not only be looking at how to improve the existing stock but will also be considering the options to exempt some assets, particularly where they have tenants in situ.

I think the best starting point for MEES compliance is to develop an EPC risk management strategy which identifies the actions to be taken and when through-out the property lifecycle. Actions will be needed at the point of acquisition, new lettings, lease advisory (where tenants are in situ), refurbishments, property management (including planned maintenance and fit-out guidance) and selling.

Delivering a robust MEES strategy will ensure that the risks are mitigated with minimal capital cost or negative impact on value. Hopefully, this will also result in improved energy efficiency, the benefits of which will be carbon reductions for tenants, landlords and the UK.

Emma Hoskyn, director, Upstream Sustainability, JLL

Topics