MEES – 1 Landlords – nil: Energy efficiency’s first goal

John Anthony Turnbridge v The London Borough of Islington [2024] UKFTT 829 (GRC)

We rarely hear about minimum energy standards (MEES Regulations) being enforced, so the recent reporting of a case appealing the issue of a penalty notice is insightful and highlights the importance of landlords reviewing their property portfolios to ensure compliance.

Facts

• On 12 November 2014, the commercial property, which was already let as a shop, was first assessed as having an EPC with a G rating
• MEES Regulations were subsequently introduced in 2018 and required all commercial properties to have an EPC of E or above before they could be lawfully let. As this property was already the subject of a lease the MEES Regulations did not bite at this point in time
• However, on 1 April 2023 the next stage of the MEES Regulations took effect. These made it unlawful to continue to let a non-domestic property with an EPC lower than an E rating. The property continued to be let and the only EPC that had been obtained was the EPC dated 12 November 2014 with a G rating
• On 6 December 2023, Trading Standards (who have responsibility for enforcing MEES Regulations) served a compliance notice on the landlord requesting the current EPC and a copy of the current lease or tenancy agreement
• This clearly prompted the landlord to take action as they arranged for a new EPC assessment to take place with a new EPC being issued on 31 January 2024. The new EPC had a rating of D (which was compliant) and the landlord responded to the officer supplying the new EPC, but not the lease, on the same day
• Evidence produced to the tribunal therefore showed that the commercial property had been let with a sub-standard EPC of G from 1 April 2023 to 31 January 2024.

Decision

As the landlord had continued a commercial letting rated G from 1 April 2023 to 31 January 2024, the landlord was in breach of the MEES regulations for this period and was fined £500.00.

The landlord appealed and was not successful – why? On the facts they were clearly in breach of the statutory requirements of the MEES Regulations.

It’s not that bad – it’s only £500?

The financial penalty in this case may not seem much. However, fines can be much higher than that for letting “sub-standard” commercial properties; up to £5,000 or 10% of rateable value (whichever is greater up to a cap of £50,000) for a breach for less than three months and up to an eyewatering £150,000 for breaches of more than three months.

On a large enough portfolio, MEES may prove to be a jackpot for many local authorities if they have the resources to take enforcement action seriously.

What is potentially of greater significance is that this is the first reported case of a landlord being fined for breaching the MEES Regulations.

Could this the first of many?

This case may not be “the one” which will open the floodgates for Trading Standards across the country to start hunting for non-compliant landlords. However, landlords need to be aware that MEES Regulations obligations should not be overlooked.

What should I do?

We would advise all landlords to review their portfolio and evaluate the properties which are non-compliant with the MEES Regulations by first checking the online EPC Register to see each property’s EPC rating.

Landlords should also be aware that the energy efficiency of buildings is clearly at the top of the Government’s agenda as two consultation are currently underway. The first (launched in December 2024 and closing in February 2025) focuses on updating how EPCs are calculated so that multiple metrics are used to give a more complete picture of a buildings energy performance. This may result in the need for new certificates to be obtained.

The second (launched in February 2025 and closing in May 2025) is looking to reinvigorate the trajectory of MEES for domestic property by increasing MEES requirements. The changes proposed are likely to require improvement measures which will be similar to meeting an EPC C on current EPC standards for all domestic lettings by 2030. A similar approach is expected for commercial properties with the Government indicating in its response to the Climate Change Committee’s July 2024 report that they intend to respond to the outstanding 2021 Consultation on tightening MEES Regulations for non-domestic properties in early 2025. The 2021 Consultation, proposed introducing minimum EPC ratings of C by 1 April 2027 and B by 1 April 2030. Please see our more detailed article on these consultations here.

Therefore landlords should be financially prepared for minimum EPC requirements on letting to increase. The Government have already fired the starting pistol with the launch of these consultations.

If you have any questions in relation to commercial lettings, or think that your property or letting might be affected by the MEES Regulations, please contact our Real Estate team who will more than happy to help.