Important changes are coming for landlords with commercial properties - as of April 2018, it will be unlawful to grant a new tenancy of a property with an EPC rating below E, however lease renewals aren't excluded from the prohibition so landlords with portfolios that include business leases with security of tenure need to change how they approach lease renewals.
In the UK, it is a regulatory requirement for landlords of commercial properties to provide their prospective tenants with an Energy Performance Certificate (EPC). The EPC rating can range from A to G, with A representing the most energy efficient building.
However, from 1 April 2018, The Minimum Energy Efficient Standards legislation (MEES) will make it unlawful for landlords to grant a new lease or lease renewal of their commercial premises if the EPC rating is F or G. The driving impetus for the implementation of MEES is to reduce energy waste and improve energy efficiency, which in turn will benefit the wider economy.
The regulations will affect landlords for a number of reasons. Where a tenant is in occupation of commercial premises pursuant to a business tenancy with security of tenure, they can make a request for a new tenancy in accordance with section 26 of the Landlord and Tenant Act 1954 (LTA 1954). Where such request is made, the landlord will need to consider what further action is required if the EPC rating is below E.