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Non-Domestic
MEES
What Effect is MEES having on the market?
MEES was introduced in England and Wales in 2018 and requires commercial properties to have a minimum Energy Performance Certificate (EPC) rating of 'E' or higher in order to be leased, sold, or renewed. From 1st of April 2023, the requirement for non-domestic landlords to obtain at least an EPC E rating, unless they have registered a valid exemption, applies to all privately rented non-domestic properties (even where there has been no change in tenancy).
The Minimum Energy Efficiency Standards (MEES) is having a significant impact on the commercial property market.
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Property Values: Commercial properties with low EPC ratings are experiencing a decline in value as their high running costs are putting off occupiers and improvement costs to improve EPCs ratings lowers the value due to further capital required. Properties with higher energy efficiency ratings are attracting better yielding tenants retaining their high value.
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Rental Demand: The regulations have led to increased demand for properties with better EPC ratings as tenants and occupiers seek energy-efficient spaces, whilst also reducing annual running costs. Offices, retail spaces, and industrial units with higher ratings are more likely to attract tenants concerned about sustainability, energy costs, lowering their carbon footprint.
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Retrofitting and Upgrades: To comply with MEES, landlords may need to invest in retrofitting and energy efficiency upgrades for their properties. This has created a market for energy consultants, contractors, and suppliers, as property owners work to improve their EPC ratings, such as upgrading insulation, lighting, heating, and ventilation systems.
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Financial Implications: Non-compliance with MEES can result in financial penalties ranging from £5,000 to £150,000, depending on the duration and severity of the breach. Landlords may also face difficulty in leasing or selling non-compliant properties, leading to potential financial loss.
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Market Differentiation: MEES has brought a new dimension of differentiation among commercial properties. Properties with higher EPC ratings are seen as more attractive and environmentally friendly, appealing to socially responsible investors and tenants. This can positively impact the marketing and leasing efforts for such properties.
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In summary, MEES has compelled commercial property owners and investors to consider energy efficiency as an essential factor. This has led to changes in property values, rental demand, retrofitting efforts, financial implications, and market differentiation within the commercial property market.
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Please see the most recent gov link below for more infomation;
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