From 1 April 2023 a landlord may not continue to let a property with an EPC rating below E unless a valid exemption is registered (this has been the case since April 2020 for domestic properties).

Although a failure to comply with the Regulations will not invalidate the lease, it puts commercial landlords at risk of a fine of up to £150,000.

What should you be doing now?

Landlords - The financial burden of upgrading properties is likely to fall on you, unless you have negotiated alternative lease wording with tenants. If you have not done so already, you should be considering the works you need to do to your property to improve its EPC rating above an E standard or whether you can apply for an exemption.

Lenders - If a building is not up to standard, the value of your security could be reduced. You should consider reviewing your lending criteria and conditions now to ensure records are being kept of property EPC ratings on all non-exempt lettings and that details of exemptions are obtained.

Investors - You should review your portfolios and consider whether any works are required to your current assets. You may also want to consider whether the introduction of the MEES threshold presents any opportunities now to acquire sub-standard assets at a reduced cost for future investment.