Minimum energy efficiency standards (MEES) will influence lease negotiations under the Landlord and Tenant Act 1954 (the “1954 Act”).
By now measures, which improve the environmental sustainability of buildings are included automatically in commercial leases. With the introduction of MEES, this issue might begin again for renewals under the “1954 Act”. However, some hurdles may be encountered, an example of this is if a landlord wants to “green” a protected lease on renewal, because the tenant’s rights have to be considered.
MEES are implemented in 2018 on lease grant, including renewal and in 2023 for all existing leases. If a landlord decides now to bring his property to a good energy performance certificate rating, he can avoid future fines.
At the moment it is unlikely that an existing lease will require a tenant to carry out improvement works related to MEES or allow the landlord to recover the cost for these. However, this is not a certainty until there is an authority in place. As a result, the landlord has to persuade its tenants of the benefits of the improvements, e.g. low operational costs.
If a tenant refuses consent to energy efficiency improvements, a landlord has the ability to claim an exemption, so he can reach the MEES minimum standard for five years. In order to claim this exemption, the landlord has to demonstrate “reasonable endeavours in seeking consent”, to avoid misuse.
In future, MEES will become more of a prominent feature of commercial leases. Nevertheless, it will remain controversial in 1954 act renewals, i.e. regarding protected tenants.
For any more information, please contact our office on 01184028520 or email us at mail@syntegragroup.com.
