MEES Regulations for commercial landlords and tenants

If you operate in the commercial property arena, you will have heard a great deal about MEES Regulations in the past few years.

According to the UK Green Building Council, 40% of the UK's total greenhouse gas emissions come from the built environment. Building operations are reported to account for 28% of global greenhouse gas emissions, and building materials and construction contribute an additional 11%. Nearly 39% of global emissions are therefore produced from buildings alone.

Over the last decade, there has been a concerted effort to reduce the environmental impact of the property and construction industries, and to move towards green leasing and improved energy efficiency in buildings.

EPC’S and Mees Regs

Energy Performance Certificates are documents that assess a building's energy performance and efficiency. They are valid for 10 years and can be reused as required within that period. A new EPC is not required each time there is a change of tenancy, or the property is sold, provided it is no more than 10 years old. Where more than one is produced, the most recent EPC is the valid one.

EPC’s determine whether a building complies with the MEES Regulations or not.

What are the current MEES Regulations?

Under Part 3 of the MEES Regulations, a landlord of sub-standard non-domestic PR property must not grant a new tenancy (on or after 1 April 2018) or continue to let the property (on or after 1 April 2023), unless either of the following applies:

• The landlord makes sufficient energy efficiency improvements to the property so that it is no longer sub-standard.
• The landlord can claim a legitimate reason not to do so, and this has been validly registered on the PRS Exemptions Register.

Minimum EPC Rating for commercial lettings in 2026

An E Rating. If the EPC says a property has an F or G rating, then a landlord cannot lawfully let that building as of 2026.

The MEES Regulations prohibit:

• The grant of a new tenancy of sub-standard commercial property, on or after 1 April 2018.
• Letting the sub-standard commercial property as a result of an extension or renewal of an existing tenancy on or after 1 April 2018.
• Continuing to let a sub-standard commercial property, on or after 1 April 2023.

Whilst the MEES Regulations offer opportunities for landlords to increase their capital values by making their properties more energy efficient, these improvements are undoubtedly costly.  Landlords are now considering whether the cost of upgrading non-compliant buildings outweighs the potential loss if their properties cannot be let or they incur a fine. 

With the minimum energy efficiency standards increasing, it may be worthwhile for landlords to make higher-quality improvements that achieve a higher EPC rating now, which could ensure future compliance and potentially avoid duplicate costs of updating in a few years. 

Note, however, that exemptions are not automatically applicable, and landlords must register on the PRS exemptions register, providing the property address, landlord name, EPC, and supporting evidence.  The register is public, and information, including the building address and the name of the landlord (if not an individual), and the exemption, will all be publicly available and visible.

It should also be recognised that exemptions are not intended to be a way out and a long-term solution.  They only offer temporary relief and are valid for only 5 years unless stated otherwise, after which landlords will need to re-register to continue to benefit from the exemption.  It should also be recognised that the exemptions are personal to landlords, so if the landlord changes, they will have to re-register in order to rely on the exemptions. 

What are the current exemptions?

New landlord exemption

This applies in circumstances where it would be unreasonable to expect new landlords to comply with their obligations immediately.  For example, where a new lease has been granted via a Court Order and a landlord is thrust into their position unexpectedly.  The exemption will be valid for 6 months from the date you become a landlord.  As with all the exemptions, landlords must provide supporting evidence when registering.  They would have to provide an explanation of why they qualify under this exemption. 

All improvements made exemption

This will apply if all cost-effective improvements have been installed in the building, but the EPC rating remains below the minimum required standard, and the property therefore remains substandard.  If you are relying on this exemption, then landlords will need to register evidence showing that no further improvements will improve the rating, such as a surveyor’s report. 

Cost-effective improvements

This applies if the cost of making recommended improvements is not cost-effective.  Cost-effective improvements mean that, after 7 years, the money saved will exceed the amount invested.  If you are trying to use these exemptions landlords will need three quotes for improvements from qualified installers and confirmation they are not cost-effective including the calculations. 

Consent exemption

This applies if, despite all reasonable efforts, a landlord cannot obtain the necessary consent to make the improvements, perhaps if it is required from a tenant in occupation, a superior landlord or a local authority.  If you are going to rely on this exemption, the landlord needs to upload any correspondence demonstrating their attempts to obtain consent from the relevant parties.  When granting new leases, landlords should consider whether rights of access for the purpose of carrying out works are included.  If they are not, then the tenant may be able to refuse access, and if they do, this may be grounds for a landlord to seek this exemption. 

Finally, there is the devaluation exemption.  This will apply if making improvements would devalue the property by more than 5%.  Again, if you are a landlord and plan to rely on this exemption, you will need an independent surveyor to confirm it in a report. 

Please note that there are some circumstances in which the MEES Regulations do not apply.  For example, the regulations do not extend to certain short tenancies, including those for a term of six months or less or with no right to renew, and to long tenancies, such as those for a term of 99 years or more. 

In addition, if a building is not required to have an EPC, then it will fall outside the scope of the regulations.  There are several circumstances in which an EPC is not required, as well as a list of exemptions that may apply to a commercial property.  If you want to look at that list, then there is some government guidance on properties that do not need an EPC. 

Do MEES Regulations apply to commercial tenants?

The answer is – definitely yes. To use an Energy Performance Certificate (EPC) for negotiation, tenants should first check the property's rating and understand its recommendations. If you are a tenant looking to lease a property for the next 5-10 years, ideally you would want to take a lease of an energy-efficient building with a high EPC rating.

The best stock is an A-rated building, but they are few and far between in the current UK property market, so it is more likely you will be looking at a property with a C-E rating.  If the property has an E rating, it is likely to be old property stock and may be poorly insulated, which could cost you more to heat.

As a tenant, take the time to review the EPC and verify its contents carefully. Does it say it is a D rating, for example, but when you scratch under the surface, it is clear that that rating has been awarded on a flawed and incorrect basis? For example, does it refer to the building having air conditioning, but in reality, the majority of the building has a traditional wet radiator system, with only a few gas-fired warm-air heaters elsewhere? Be aware that, because systems are currently defined in the assessment system, the term air conditioning includes air-source heat pumps, which is why the inclusion of air conditioning is beneficial to an EPC source.

If a landlord wants you to pay a substantial rent, then lease negotiations are exactly the time when you, as the prospective tenant, should be negotiating for either a lower rent due to higher energy costs or for the landlord to make recommended improvements.

The EPC includes a "recommendations report" detailing specific improvements, their estimated cost, and the potential savings on energy bills. The report may also list available grants. If you discover the property has a poor rating E, F, or G, as a prospective tenant, you have a strong negotiating position.

Even if the property meets the current standard, you can point out the cost savings of improving the rating. For example, a property with a C rating can still have room for cost-effective improvements, such as better insulation or a more efficient boiler. During negotiations, reference the recommendations in the EPC report to make specific, evidence-based requests. Request high-impact, low-cost improvements: Mention practical upgrades like installing LED lighting, draught-proofing windows and doors, or increasing hot water cylinder insulation. These are often inexpensive for landlords but result in immediate savings for you. For more substantial work, such as new double glazing or wall insulation, ask the landlord to finance the improvements. You can frame this as a way to "future-proof" the property and attract future tenants. Highlight that future regulations will require a higher EPC rating for rented properties.

For England and Wales, proposals suggest a minimum C rating for new tenancies from 2028 and all tenancies by 2030. This creates an incentive for the landlord to invest now. 

What else should tenants negotiate in a new lease?

• Define maintenance responsibilities: Ensure the tenancy agreement clearly states who is responsible for minor vs. major repairs. Negotiating a clause that makes the landlord responsible for larger items, like a broken boiler, can save you from unexpected costs. 
• Deposit and fees - negotiate deposit amount: If you are a strong applicant, you may be able to negotiate a slightly lower security deposit, though this is less common.
• Flexibility on lease terms: If you need flexibility, negotiate a break clause that allows you to end the tenancy early, provided you give sufficient notice.

Why landlords should improve building energy efficiency

If a property has a low rating and a landlord is unwilling to make improvements, a tenant is unlikely to want to pay a higher rent, as they may also face higher energy bills. To maximise income, a landlord must do what they can to improve the energy efficiency of their building. One option might be to share the cost of improvements: Offer to split the cost of minor upgrades. This might allow a tenant to get an immediate reduction in their utility bills. In exchange for a landlord's improvements, a tenant may be willing to accept a longer tenancy agreement, which guarantees a landlord’s rental income and provides a return on their investment. 

Do MEES apply to terminal dilapidations claims?

Yes- they are potentially very relevant. For tenants facing a dilapidations claim, Minimum Energy Efficiency Standards (MEES) and Energy Performance Certificate (EPC) ratings can be powerful negotiation tools. If the property's EPC rating is low (F or G), a landlord may be legally obligated to make substantial improvements that supersede a tenant’s repair obligations, limiting the tenant's claim for damages. 

The most significant leverage for tenants comes from the "supersession" argument. This principle applies when a landlord's intended works at the end of a lease would make any repair work carried out by the tenant valueless. 

For properties with low EPC ratings: Landlords in England and Wales are prohibited from letting or re-letting commercial properties with an EPC rating of F or G. This means that if a property is rated F or G, the landlord cannot re-let it without first carrying out significant energy efficiency upgrades.

Tenant defences to MEES dilapidations claims

• Supercession: If the landlord's plan involves replacing old and inefficient systems (such as heating or lighting) to meet new energy standards, this may supersede the tenant's repair obligations for those same systems. An outgoing tenant may be able to argue that they should not have to pay to repair something that the landlord will replace anyway.
• Landlord's intention: An outgoing tenant’s negotiating position is strengthened if they can demonstrate that the landlord intends to carry out major refurbishments or redevelopment. The cost of any repair works would then be superseded by their more extensive plans. 
• Question the landlord's loss (Section 18 cap): The Landlord and Tenant Act 1927 limits a landlord's damages claim to the amount by which the value of their property has been reduced due to the tenant's breaches, known as "diminution in value".

A surveyor can provide a Section 18 valuation to challenge inflated claims, especially if the landlord does not intend to carry out the repairs.