Despite new Minimum Energy Efficiency Standards (MEES) legislation coming into effect in April, there is still a significant lack of understanding around the energy efficiency of office buildings
Too many UK businesses are largely unaware about new environmental legislation concerning the energy efficient office buildings they own and occupy, according to a new survey commissioned by Irwin Mitchell: Redefining the Office – A report on office occupier trends in 2023.
The new Minimum Energy Efficiency Standards (MEES) legislation requires that from 1st April 2023, property owners must not continue to let properties that have an EPC rating of F or G (unless they have an exemption) and all let properties will need to have a minimum EPC rating of E.
Less than half of survey respondees were prepared for the legal changes
The survey of over 500 office property decision makers found that only 32% of respondents said they knew the Energy Performance Certificate (EPC) rating of their main office building, with a similar percentage of only 31% saying they know what EPC rating their office needs to be in April.
Nearly a fifth (19%) of the property decision makers surveyed admitted they do not know their office’s EPC rating at all.
Another 18% admitted they do not know what is needed for their energy efficient office building to be compliant in April.
10% of respondents said they do not understand EPC ratings.
Tim Rayner, joint head of real estate disputes at Irwin Mitchell, commented: “These figures should raise eyebrows, particularly given the changes come into force in April and with further new Minimum Energy Efficiency Standards (MEES) legislation down the line. For example, for all new tenancies beginning in 2025, the government is keen to change the minimum rating to a C.”
The survey revealed a number of concerns with the new MEES legislation
Topping the list of surveyee’s concerns was lack of knowledge– with just under a third (32%) responding that they were concerned that they don’t know whether their office will be MEES compliant from April 2023.
Other concerns respondents listed were that landlords would pass on the extra costs of upgrading buildings via the service charge or dilapidations claims (21%) and the disruption to working when landlord upgrades are carried out (18%).
16% of respondents said that they were concerned that if their landlord did not carry out the requisite work, they won’t be able to renew their lease.
Tim Rayner continued, “Office occupiers really need to keep an eye on the situation. Whilst the cost of upgrades is in theory an issue only for landlords, some landlords may prefer not to incur that costs at all and instead try and end the lease.”
“Those landlords who intend to carry out the upgrades may not only want access to the premises and cause potentially significant disruption but may try and pass on the cost of the upgrading either via the service charge or by seeking to include additional obligations in new leases, making tenants expressly liable for such costs. The MEES deadline is fast approaching and therefore it’s important that tenants are forearmed and ensure, for instance that their leases provide the controls they need.”
84% of respondents said they’d be prepared to pay higher rents for office space that reduces their impact on the environment– but most would expect some payback from the landlord in terms of reduced service charge or energy bills.