21st January 2016
In order to achieve the UK’s legislative carbon-reduction targets, greenhouse gas emissions from buildings must be almost zero by 2050. Whilst standards are already in place to deal with the energy efficiency of new buildings, bearing in mind that over half of the buildings standing today will still be standing in 2050, improving energy efficiency standards for existing buildings will be key to achieving carbon-reduction goals. The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (the Regulations) will go some way to achieving those targets as, from 2018, they will prohibit landlords form letting commercial properties with an EPC rating of less than E.
Approximately 18% of commercial properties (and 10% of domestic properties) are in the lowest two Energy Performance Certificate (EPC) bands (bands F and G). As a result, the government included provisions in the Energy Act 2011  to guarantee that the energy efficiency standards of buildings achieved a requisite level and to oblige the Secretary of State to put in place regulations to support these measures. As a result the Regulations were made, Parts 1 and 2 of which come into force in April this year, with Part 3 coming into force in October and as a result Minimum Energy Efficiency Standards (MEES) will apply to private rented property in England and Wales.
By virtue of the Regulations by April 2018 all eligible commercial property will need to obtain an EPC rating of no less than E before it can be let. Initially the Regulations will prohibit a landlord granting a new tenancy or renewing an existing tenancy; however as of 1 April 2023 the Regulations will apply to all lettings, including those subject to existing leases.
The requirement for a EPC rating of E will not, however, apply to leases granted for a term of six months or less (providing that the granting of the tenancy does not mean the tenant will have occupied the property for more than 12 months) or any property let on a tenancy of more than 99 years. Furthermore those properties that are not required to have an EPC are outside the scope of the Regulations.
The Regulations include safeguards designed to ensure that only appropriate and cost-effective improvements are required. Landlords may be eligible for an exemption from the requirement to reach the minimum EPC standard if they can evidence that one of the following applies:
If an exemption applies, a landlord will be able to let a property even if its EPC rating is lower than E, but the exemption must be registered.
Landlords would be well advised to start reviewing their portfolios now in order that any work required to comply with the legislation can be undertaken in good time (and in any event by the deadlines of 1 April 2018 for new leases and lease renewals and 1 April 2023 for all lettings).
Landlords may also want to consider whether they wish to make any changes to their standard form leases to take into account the Regulations. Provisions which may be affected include the following:
As such, whilst some amendments to leases may be worth considering, landlords should ensure that any changes made do not have unintended implications for tenants.
 Sections 42 – 51
 The Green Deal is the government’s flagship initiative to improve the energy efficiency of buildings by eliminating the up-front cost of certain energy-efficiency measures. It is based on the key principle that energy efficiency measures should be self-funding through the resultant savings on energy bills (known as the ‘Golden Rule’).