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The impact of MEES on building management and property transactions

The impact of MEES on building management and property transactions

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In advance of the MEES regulations coming into effect in April, Thomas Vazakas, Technical Director, discusses the effects for building managers and owners.

Minimum Energy Efficiency Standards (MEES) will come into force from the 1st April 2018 and will provide a new legal standard for minimum energy efficiency.

The result of legislation in the Energy Act 2011, the scope of MEES is defined by reference to the Energy Performance Certificate (EPC) rating of a building. Currently the EPC rating ranges from A-G, however this introduction will change the minimum accepted standard to ‘E’.

An EPC is already required to let or market a property legally, but MEES will make it unlawful to let or sell buildings (both commercial and domestic) in England and Wales that have an EPC rating of ‘F or G’ (estimated to be around 20-25% of existing buildings).

If a building is F or G rated, building owners will need to consider an approach to improve it and carry out any changes, both of which will require time. However the efforts invested will likely provide a good payback, especially in cases where the overall building improvement and not just the EPC rating is targeted.

The link between MEES and EPCs is important as it provides both a benefit and a problem for the scheme. Using EPCs as a metric tool for MEES is a good approach because they have been used for the last 10 years and the industry has learned how to produce and use them effectively. The major benefit being that it ensures the transition to MEES will be as smooth as possible.

However, EPCs were introduced in 2007 and provide an indicator of the energy performance of the building as an asset, not a prediction of running costs or long term energy consumption. The actual energy performance of a building in operation could be better or worse. This is similar to a car’s miles per gallon (mpg) figure, which only allows buyers to see what a car’s likely fuel use might be, however the actual fuel usage depends on how the car is driven.

EPCs are valid for 10 years; therefore a certificate produced in 2009 can still be used for property transactions today. However, the EPC is only really ‘accurate’ on the day it was produced and so if used for a transaction nearly 10 years later, the chances are that it will not reflect the current condition of the building, either because of improvements made since, better information available or changes in the calculation methods and carbon factors in fuels.

Moreover there are many questions over the accuracy of EPCs, even when produced. There are three main factors that influence the accuracy of an EPC in the early days of the scheme: competence of assessors (significantly improved through CPD and auditing); human error due to urgency (ongoing audit regime and reasonable timeframes set by clients minimise the risk); and conventions (guidelines produced by accreditation bodies and approved by DCLG to ensure similar approach in all buildings).

Therefore for MEES to fulfil its potential, we need more accurate EPCs. A new and more accurate EPC will lead to better and less risky MEES related decisions. Consequently it is important for building owners and managers to get a clear picture of their current building stock and EPC rating, carry out an EPC on all buildings that have either a poor or old certificate and start planning any improvement works to be carried out. MEES looks set to become very important on discussions with future tenants and/or buyers, so it is worth engaging now.

RPS is an accredited organisation for the production of EPC and also has extensive experience in advising on energy saving measures. To help, we have prepared a short guide on how to make MEES work for your buildings, click here to view. Get in touch with Thomas Vazakas for more information.