Landlords could face fines of thousands for energy non-compliance

15th Mar 2023 4 minute read

April’s EPC legislation changes would mean non-domestic property owners could incur fines of up to £150,000 from Apr 1, 2023.

Landlords are being urged to adhere to new regulations for their properties, or face thousands of pounds of fines.

With regulations being tightened by the government from April 1, we’re reminding owners of non-domestic rental properties to get their buildings up to standard.

Lincoln Smith, Managing Director of Custom Heat, says:

“We’re concerned that the changes to the legislations aren’t ‘common knowledge’ meaning that hundreds of landlords across the region may face fines of thousands for very avoidable property issues.”

Changes will mean it will become unlawful for a landlord to “continue to let” a substandard property unless they have made all possible cost-effective energy efficiency improvements prescribed by Minimum Energy Efficiency Standards (MEES), ensuring all rental properties have an Energy Performance Certificate (EPC) rating of E or above.

The government is making an amendment to the MEES next month, which in basic terms means that any commercial property with an EPC rating of F or G will be considered ‘sub-standard’, and therefore they could be liable to pay thousands of pounds of very avoidable fines.

“We have already spoken to dozens of landlords who we have previously worked with and they didn’t know about the changes, so have enlisted our help to get their properties up to standard, which has been anything from modifications for heating, lighting and ventilation to adding internal insulation, floor insulation and improved heating controls. So if they don’t know about it, we are concerned others don’t too, and time is running out.”

Lincoln Smith, CEO, Custom Heat

The legislation states that landlords who fail to comply could look at a fine of a minimum of £5,000 or non-compliant properties let for less than three months. When non compliance extends beyond a three-month period, penalties could reach 20% of the rateable value with a minimum fine of £10,000 to a maximum of £150,000.

“Budgets are tightening and with prices rising as a result of the cost of living crisis, it is crucial that landlords consider MEES compliance in their financial planning and ensure they do not let it fall down the priority list and risk significantly devaluing their assets.”

“We must stress though that we do support this legislation change as it plays an important role in achieving the government’s goal of Net Zero by 2050, we just want to make sure that landlords are ready and make the change now.”

The intention, as part of the transformation of the UK energy system and the delivery of Net Zero, is that all rented non-domestic buildings achieve an EPC of C by 2027 before attaining B by 2030. On current assessments, only 12% of all registered commercial properties meet this criteria: the country has a long way to go to meet this goal.

Which tenancies does MEES apply to?

If an EPC is not currently in place, the requirement is activated when particular alterations are made, if a new property is constructed or if a property is sold or rented. The certificate is valid for ten years from the date of registration and is placed on the EPC register. 

MEES applies to all non-domestic properties that are let pursuant to either an assured tenancy or a regulated tenancy (or a domestic agricultural tenancy) and are legally required to have an EPC. 

If the tenancy is over 99 years or less than six months then the regulations do not apply.

The requirement to get an EPC (if one is not already in place) is triggered when certain alterations are undertaken, on the construction of new properties and where a property is sold, assigned or rented. The EPC certificate is issued by an assessor and is valid for 10 years from registration on the EPC Register.

For more information or to discuss your requirements, contact the team at Custom Heat.

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