This site is intended for Healthcare Professionals only

energy rating summary.jpg
Running Your Business bookmark icon off

Energy regulations: Change around the corner

As a pharmacy business, what do you need to know about MEES?

As a pharmacy business, what do you need to know about MEES? By Ben Butterworth

The Minimum Energy Efficiency Regulations (MEES) have been in effect since March 2018. They set out the minimum Energy Performance Certificate (EPC) rating requirements for residential and commercial properties, including pharmacies.

The basic principle of the MEES is to stop landlords from letting ‘substandard’ properties – those deemed not suitably energy efficient for tenant occupation. Currently, the MEES only apply where a new lease is granted or renewed, but significantly, from April this year, the MEES will apply to all lettings – even ones already in existence. 

This means that landlords will be in breach of the MEES if they continue letting a substandard property and they will be at risk of enforcement action.

There are a limited number of exemptions and properties excluded from the MEES, but we will not discuss these in this article.

Substandard properties

To be deemed suitable for letting under the MEES, a property must have an EPC rating of at least E or higher. So, if a property has an EPC rating of F or G, then a landlord risks enforcement for being in breach of the MEES if they grant a new or renewal lease of the property, or allow an existing lease to continue when the MEES rules change next month.

In light of the broader push for the country to go greener, the Government has consulted on increasing the minimum EPC rating that properties require.

The current Government proposal is to raise the minimum EPC rating for the purposes of the MEES from E to B by the year 2030. This is a very significant increase that could leave a large number of properties struggling to meet the minimum standard.

If you already occupy property under a lease and your property is substandard, then from April this year, your landlord is prohibited from continuing that lease unless they can provide either an exemption for the property or prove that one of the following applies:

  • The landlord has made sufficient qualifying energy efficiency improvements which make the property a sufficient standard, meaning it has an EPC rating of E or higher
  • They have made all qualifying energy efficiency improvements that they can make to the property, even if these do not mean the property achieves an EPC rating of E or higher and they have registered appropriate information on the government exemptions register
  • They cannot make any qualifying energy efficiency improvements to the property and they have registered appropriate information on the government exemptions register.

If the landlord can prove point two or three above, they will be granted a five-year window to allow new lettings or continue existing ones, even where the property is substandard. This is their responsibility and cannot be shifted onto a tenant.

Qualifying energy efficiency improvements are described as ‘relevant energy efficiency improvements’ in the MEES, which describe them in detail.

Alterations required?

The MEES do not place any obligations on landlords or tenants to do works. There is therefore no statutory obligation to do works which can be passed on to your business.

However, by virtue of the prohibition on granting new leases of substandard property after 1 April 2018 and on continuing existing leases of substandard property from 1 April 2023, there is a possibility that works may be required to bring a property up to scratch to avoid enforcement risk.

When negotiating a new or renewal lease, however, pharmacists should be cautious that their landlords may seek to include bespoke provisions which expressly require them to improve the EPC rating of the property, carry out energy efficiency improvements or to allow landlords to reclaim the cost of such works through a service charge. We recommend that you seek expert legal advice in relation to such matters.

Could I be penalised if my landlord breaches the MEES?

No. If a landlord is in breach of the MEES, they are liable to enforcement action by the local authority and could receive a financial penalty. This has no effect on the validity of your lease and you as a tenant will not be liable for any penalty.

Sublets

If you want to sublet the whole or part of your pharmacy property, then you will caught by the MEES as the landlord of the sublease. 

This means that you will be required to comply with the MEES and ensure that the property you are subletting has a sufficiently high EPC rating to avoid the MEES enforcement risk.

If you have any concerns about your property’s EPC rating, we recommend you seek expert advice in readiness for the upcoming changes next month.

The above is a general overview and we recommend that independent legal advice is sought for your specific concerns.

Ben Butterworth is a real estate solicitor and member of the pharmacy transactions team at Charles Russell Speechlys LLP. ben.butterworth@crsblaw.com

Copy Link copy link button

Running Your Business

Share: