Commercial Properties could be Unfit to Lease

Commercial landlords need to double check their leases to ensure they are compliant and that their properties meet the minimum energy efficiency standards.

The Minimum Energy Efficiency Standards (MEES) were first introduced in 2018 to set a minimum standard for Energy Performance Certificates (EPCs) at an E rating or above.

Commercial Leases and EPC

Until 1st April this year, the regulations applied only to new leases being granted. However, they now apply retrospectively to all commercial property.  This means landlords need to double check their leases to ensure they are compliant. If not, the commercial properties could be classed as no longer fit for occupation.

It is estimated that 19,000 commercial properties are now to be classed as unfit for occupation, according to recent data from Search Acumen*.

What is an EPC?

The EPC is a document record that assesses the energy efficiency of a building. It provides information about the energy usage and carbon emissions of a property and rates it on an efficiency scale from A (most efficient) to G (least efficient). Whilst not all properties have EPCs most do as they are required when a property is built, sold, or leased.

“When it comes to commercial property leases EPCs play an important role.  It is important for landlords to future proof their commercial portfolios and ensure compliance with stricter regulation and we can advise accordingly, said commercial property lawyer Paul McGladdery.

“At the same time, when we act for tenants, we can review the EPC rating to ensure the property can be let and advise on this in relation to the client’s needs,” he added.

Who is responsible for the EPC landlord or tenant?

Commercial landlords are required to provide an EPC to prospective tenants when marketing a property for rent. The EPC gives tenants an idea of the energy efficiency of the building and can help them make informed decisions about the costs and environmental impact of occupying the premises.

“Since the new regulations came into force, landlords may need to retrofit energy efficiency improvements to their properties in order to reach an EPC rating of E or above.  Only then will they comply with the regulations and they have to achieve this before they can even consider leasing them out.  Now landlords with properties currently let need to consider their position,” added Paul.

“It's important for both landlords and tenants to understand the energy efficiency implications and any legal requirements related to EPCs and commercial property leases and a professional commercial property solicitor can steer both in the right direction.”

The recent data from Search Acumen is based on information the government holds on registered EPCs, which states that there are currently 19,166 commercial properties for lease in the UK (including offices, shops, hotels, libraries, museums, education and healthcare facilities) with an EPC rated below minimum standards.

How can we help

At Pearson, our commercial property solicitors will check the EPCs to make sure they meet the minimum energy efficiency standards. Our team can advise both commercial landlords and tenants on the minimum rate and if there is any works needed to bring the property up to standard.

Contact our experienced commercial property team on 0161 785 3500 or email enquiries@pearsonlegal.co.uk

*Search Acumen is a UK-based legal technology company providing search, data and automation techniques to conveyancers.

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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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