Updates to the Minimum Energy Efficiency Standards (MEES) in Northern Ireland

Since 1 April 2018, the Minimum Energy Efficiency Standards (MEES) have required commercial landlords to ensure that their commercial properties in England and Wales have a minimum Energy Performance Certificate (EPC) rating of E before granting a new tenancy to new or existing tenants, unless a valid exemption applies.

An EPC rating of F or G is, since that date, sub-standard for MEES purposes. In a significant extension of these rules, from 1 April 2023 it will be unlawful for a landlord to continue to let a commercial property with a sub-standard rating, unless a valid exemption applies.

In 2019, the Department for the Economy launched a public consultation on proposals to introduce MEES in Northern Ireland. To date, no formal proposals have been issued. However with the further extension of these rules it is difficult to see how NI can continue without a version of its own in the next few years.

If these standards were to become effective in Northern Ireland, commercial landlords in the region would likely experience a significant impact on their properties and investment value.

The impact of MEES in E&W means that landlords are required to undertake energy efficiency improvements to their properties if their EPC rating falls below the minimum standard. Failure to comply can result in hefty fines and a prohibition from letting the property until the necessary improvements have been made.

If these standards were to become effective in Northern Ireland, commercial landlords would be required to comply with the same regulations, leading to potential costs and changes in property management. Currently, Northern Ireland does not have its own minimum energy efficiency standards for commercial landlords, meaning that properties with a low EPC rating can still be let legally. However, it is important to note that Northern Ireland has its own energy efficiency legislation in place, such as the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, which apply to commercial properties with tenants that receive public funding.

If the MEES were to become effective in Northern Ireland, commercial landlords would be required to invest in energy efficiency improvements to their properties to meet the minimum EPC rating of E. These improvements could include installing insulation, upgrading heating systems or replacing windows and doors. The cost of these improvements could be significant, depending on the current state of the property and the extent of the work required. However, it is worth noting that these improvements could also result in long-term cost savings for landlords and tenants, as energy bills are reduced and the property becomes more attractive to potential tenants.

The impact of the MEES on commercial landlords in Northern Ireland would also extend to the property market. Landlords with properties that do not meet the minimum EPC rating may find it difficult to let their properties, as tenants are becoming increasingly aware of the benefits of energy-efficient buildings. Properties with a higher EPC rating may also command higher rents and be more attractive to potential tenants, leading to an increase in demand and potentially higher rental yields for landlords.

However, it is important to note that the impact of the MEES on commercial landlords in Northern Ireland will depend on the specific details of the legislation and the exemptions that are put in place. For example, in England and Wales, there are certain exemptions for properties that are listed buildings, or where energy efficiency improvements would have a negative impact on the property’s value. It is possible that similar exemptions may be put in place for Northern Ireland, which would mitigate the impact on landlords.

Ultimately, if the Minimum Energy Efficiency Standards for landlords in England and Wales were to become effective in Northern Ireland, commercial landlords would likely experience a significant impact on their properties and finances. However, these changes could also result in long-term cost savings and increased demand for energy-efficient properties. It is important for landlords to stay informed about any changes to energy efficiency legislation and to take steps to ensure their properties meet the minimum standards to avoid potential fines and restrictions on letting their properties

For more information on this topic, please contact John Tougher, Partner or any member of the Belfast Real Estate Team.

Date published: 29 March 2023