As of April 2018, the Minimum Energy Efficiency Standards (MEES) will take effect. Under the Energy Efficiency Regulations 2015 in the Energy Act 2011, landlords with any real estate that tests below a band E will not be able to allow a new lease, a renewal or extension on their current leases. A ruling that needs to be taken seriously, when 2020 hits residential and commercial properties that don’t meet this standard will become legally unliveable.
So how does this effect dilapidations?
Well, by not meeting the band E rating it doesn’t mean that it is a breach of repairing covenant. Even though a tenant is required to vacate a property in a good condition, it isn’t their responsibility to guarantee that it meets MEES, especially if it was not compliant when entering into an agreement. As a result, there is no requirement in the Act to upgrade the premises or building but it instead stops non-compliant properties from being leased.
As a tenant, it is up to them to make sure that the property is in the good condition it should be, however, their lease can be suspended by any works that are needed from the landlord to meet the right level of energy efficiency. Take for example if one of the HVAC systems in a commercial office block needed to be fixed to achieve the band E rating. There wouldn’t be a need for a tenant to make repairs under dilapidations to services if they were only going to end up getting taken out to makes the MEES changes. In this scenario, the landlord wouldn’t make a financial loss due to the dilapidations so no claim would be needed.
Therefore, the influence on MEES on dilapidations is substantial and should be taken seriously by landlords and tenants. With the changes still being a few months away, if you aren’t aware of the implications, you should speak with your property agents or conduct the necessary research to ensure you understand the position you’re in. By speaking with professionals, tenants will be able to avoid large costs as landlords are going to have to make significant changes to their properties to prevent possibly penalties when the laws kick in.
It is key that following the regulations starting, people grasp that this isn’t another measure introduced to benefit landlords. It will be highly important for commercial tenants to seek the advice of those in the know to ensure that they are not paying large sums of money for something they are not liable for.
If you are a commercial tenant or landlord and would like to speak to one of our dilapidations specialists here at Roger Hannah & Co, please follow this link to make your enquiry today – it could save you a lot of money!