Minimum Energy Performance Standards

Published: 
Fri 05/02/2016

Minimum Energy Performance Standards (MEPS), also known as Minimum Energy Efficiency Standards (MEES), is a piece of legislation implemented as part of the Energy Act of 2011. This legislation means that as of April 2018, it will be unlawful for landlords to let properties in England and Wales which have an EPC rating of F or G.

MEES will directly affect around 75,000 commercial properties which currently carry an F or G rating. It could also affect some of the 65,000 premises with a current E rating, as the measurement bands for the EPC rating are constantly changing due to more and more energy efficient properties being built. It is estimated that around 18% of non-domestic buildings have these low EPC ratings, and a large chunk of these are in the private rented sector.

Meeting the Standards

Bringing your property up to standard can seem like a daunting task, especially if you’re a landlord with a number of commercial properties in your portfolio. It could also potentially cause problems for tenants if upgrades to equipment are needed and working space is disrupted.

For many, the main issue is the cost of replacing or upgrading inefficient equipment. Quite simply, very few landlords have enough spare cash floating around to be able to afford an influx of new equipment for their property (or properties). Any premises with such a low EPC rating is likely to run highly inefficient equipment, making it more likely that a full upgrade of all energy equipment will be necessary and thus increasing the cost of the work.

However, the key is to treat MEES as an opportunity, not a hindrance. Landlords who are willing to invest more money now will see greater long-term benefits if they are willing to install equipment which will take their premises above and beyond an E rating. Why only spend money to meet the standards when surpassing them will save money in the future?

Splitting the Difference

If your current tenants are on a long-term lease and they pay the energy bills, the idea of lowering those costs will appeal to them and may encourage them to share the cost of investment with the landlord. Some companies may even wish to get involved voluntarily, as an active interest in lowering carbon emissions and improving energy efficiency shows a distinct awareness of corporate social responsibility (CSR). An improved sense of CSR also reflects very well on landlords.

Clear communication and a good business relationship between landlords and clients are vital aspects of meeting MEES. It is important to distinguish how any savings made on energy bills will be split between to the two parties, as well as how costs will be met when identifying and installing equipment.

This depends on a number of factors. If the tenant is on a short-term lease and are scheduled to leave the property before or shortly after April 2018, it’s not in their financial interests to share the equipment costs with the landlord. However, moving offices can be a huge and potentially expensive undertaking. The convenience of staying put along with the propositions of lower energy bills and vastly improved conditions may be enticing to tenants and may encourage them to sign a new lease, meaning landlords don’t have to advertise or risk losing money through lack of occupancy.

If tenants are on a long-term lease, getting landlords and tenants to sit down and talk through the steps to compliance and splitting the costs/rewards is the best way to proceed. It is essential that all parties involved are clear on what needs to be done before proceeding.

Steps to Compliance

There are 9 main steps towards compliance with MEES legislation:

1. Identify EPC grades for all buildings – If you own property which already has an EPC rating of F or G, there is no need to conduct a new EPC survey if you have previously done nothing towards improving this rating. If you feel that you have already done some work to your property that may have improved your rating already, it is important that you get a new survey done. As previously mentioned, if you own property which currently has an E rating, it’s essential that you get a new survey done on your property, as your rating may have decreased.

2. Establish the lease/sale/building life timescales – Establishing out how long the current tenants have remaining on their current lease and if they wish to extend it, as this has bearings on planning for compliance. Also, establishing whether or not you wish to sell your property, as whoever buys it from you will need to be aware that they’ll need to upgrade it to meet MEES.

3. Prioritise the buildings based on need/benefit – This mainly applies to landlords who own and operate more than one commercial property. It’s important to decide which of your properties needs the most work and attention and in what order you wish to upgrade your property. This is especially important when negotiating timescales with contractors and assessing impact on tenants.

4. Identify improvement measures – Bringing in certified energy surveyors to assess what work needs to be done, what new equipment needs installing and what existing equipment can be upgraded in order to bring the premises up to the desired EPC rating.

5. Cost improvement measures & calculate ROI – Finding out your final costs (equipment, labour etc.) and figuring out the payback length of your return on investment.

6. Landlords and tenants to discuss approach – As mentioned before, a clear understanding between the two parties on finances and responsibilities, both before and after work takes place, is vital to a successful building upgrade.

7. Agree implementation plan & publicise – What’s going to happen and when, making sure all affected or involved are engaged and aware.

8. Action the measures – Carry out your planned works with your contractor of choice. You may wish to visit the International Performance Measurement and Verification Protocol (IPMVP) library of documents before proceeding. The IPMVP provides an overview of current best practice techniques available for verifying results of energy efficiency, water efficiency, and renewable energy projects in commercial and industrial facilities.

9. Re-benchmark consumption & EPC rating – Once the project is complete, re-evaluate energy consumption and commission a new EPC survey to determine your new EPC rating.

Why choose Building Energy Control?

If meeting MEES seems like a huge headache, it doesn’t need to be. Building Energy Control have unrivalled experience in energy efficiency projects of various sizes, so however large or small your premises are, we are well-equipped for the task. Our engineers are used to working around the working hours of others, therefore when you’re working on an implementation plan, we can reassure tenants that all the work we carry out will keep disruption to an absolute minimum.

BEC can assist with almost every step of the compliance agenda; from identifying EPC grades, establishing building life scales and identifying improvements, to full installation and re-evaluation of total energy consumption. We can calculate payback and return on investment figures if you wish us to do so.

Our company recognises that it’s not very common for landlords to have enough spare capital available to carry out extensive energy efficiency programmes, particularly those with more than one property. At BEC we can help you put together a thorough, sensible, and affordable funding plan for your MEES upgrades in association with trusted third-party funders. Once equipment is installed the funding is repaid through savings made, so once the payback age of the project has been reached all the subsequent savings will be passed directly to you.

Every building has different energy needs, and nobody understands this more than us. We are an independent business with no ties to single manufacturers. This means that where other firms might suggest installing certain equipment purely because of close links or contracts with manufacturing companies, BEC will always guarantee that any equipment installed will be the best kit for the job at hand. The sooner you act on bringing your properties up to the Minimum Energy Efficiency Standards, the easier it’ll be to confront. Get in touch with Building Energy Control today to start your journey towards compliance.