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This article was first published by EG – @EGPropertyNews – on 29 January (here). It is reproduced with their permission.
MEES and listed buildings
Since April 2023, the MEES Energy Efficiency Standard imposed by the Energy Efficiency Standard (Private Rented Property) (England and Wales) Regulations 2015 (commonly known as the MEES Regulations) generally requires commercial properties to have a minimum energy performance certificate rating of E to be let or continue to be let. But what does a landlord of a listed building need to do to comply with MEES?
Must an EPC be obtained for a listed building?
There is currently no obligation under the Energy Performance of Buildings (England and Wales) Regulations 2012 to commission an EPC for any existing building unless it is being sold, let or significantly altered. In those circumstances an EPC will usually be required, unless the listed building is exempt.
Aren't all listed buildings exempt from the requirement to obtain an EPC?
Not exactly. The EPC Regulations state that listed buildings are exempt from the requirement to obtain an EPC "insofar as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance".
This does not therefore mean that all listed buildings are exempt, despite a common assumption that there is a blanket exemption for listed buildings.
Instead, the owner must assess whether the steps required to improve the energy efficiency of the listed building would have an unacceptable impact on its character or appearance. If significant changes will need to be made, such as replacing the period windows with modern alternatives or installing solar panels, this is likely to be seen as a requirement which would unacceptably alter the appearance of the listed building.
However, there may be other requirements which do not impact the character or appearance of the property and which will exclude reliance on the exemption, for example putting LED bulbs in existing light fittings. Unless another exemption applies under the EPC Regulations, in this situation the MEES Regulations will apply and the owner will need to obtain an EPC if it intends to sell or let the property.
How do you assess whether a listed property is exempt?
You should seek advice from a qualified EPC assessor or surveyor on the potential measures required to improve the energy efficiency of the property. You will then need to consider whether there would be any anticipated change in appearance or character of the property and, if so, whether this would be "unacceptable". The conservation officer at the local authority may be able to give some advice in making this assessment. Where an energy efficiency measure will require listed building consent which is unlikely to be granted, this would point towards the conclusion that it would unacceptably alter the character or appearance of the property.
If a listed building is exempt under the EPC Regulations, do I still have to comply with the MEES Regulations?
No. The MEES Regulations apply to privately rented properties which are required to have an EPC. Therefore, if a listed building is exempt under the EPC Regulations, the owner is not required to comply with the MEES Regulations.
Additionally, you do not need to register the property on the PRS Exemptions Register, as this is only for properties which are subject to the MEES Regulations.
Is it a better approach to obtain an EPC for a listed building in any event?
If an owner of a listed building decides to obtain an EPC in any event and the resulting EPC rating is worse than E (ie an F or G rating), this may cause more complications on both a sale or a letting of the property. This is because, if an EPC is required under the EPC Regulations, the EPC rating must be of a sufficient level to comply with the MEES Regulations. A potential buyer, lender or tenant may feel less comfortable about relying on the exemption under the EPC Regulations (ie that no EPC is required) if a sub-standard EPC has already been obtained and recorded on the EPC Register.
However, if an owner of a listed building is confident that the property will be awarded a good EPC rating (ideally an A or B rating, given the potential changes in minimum ratings at some point in the future), then it might be advantageous to obtain an EPC. This is because it removes the requirement for a potential buyer/tenant to form a view as to whether or not the listed building is exempt under the EPC Regulations.
What steps should a prospective buyer or tenant of a listed building take?
The first step by both a prospective buyer or tenant of a listed building where no EPC has been obtained must be to ask the owner how it reached the conclusion that the property is exempt.
If the owner has not carried out an assessment, then a prospective buyer and tenant will be in slightly different positions.
A prospective buyer will need to go through the same thought process and analysis, given that it will be stepping into the shoes of the owner once it has purchased the listed building.
A prospective tenant is in a better position, given that the onus is on the landlord to comply with the EPC Regulations and MEES Regulations. However, there will still be concern over the absence of a valid EPC (and not knowing if one is required), causing issues if the tenant wants to assign or underlet the property in the future. To protect its position, a tenant may insist that the landlord carries out the assessment before proceeding with the letting.
To head off unnecessary delays, an owner of a listed building should always plan ahead and consider the EPC issue in advance of any intended sale or letting. As ever, preparation is key to a smooth transaction.
