Did you know the UK built environment is responsible for 25% of the country’s greenhouse gas emissions?
In response, the Government published their ‘net zero strategy’ in 2021 which sets out a pathway to achieve net zero by 2050.
The tightening of energy efficiency regulations has since acted as a catalyst with landlords being left with no choice but to improve the green credentials of their buildings. This has led to ‘green lease clauses’ becoming an industry standard.
A green lease is a lease that incorporates clauses that provide for the management and improvement of the environmental performance of a building by the landlord and the tenant who agree to undertake specific responsibilities and obligations to minimise carbon emissions arising from the sustainable development, operation, and occupation of a property.
So, what are the changes?
Upcoming regulatory changes are due to come into effect on 1 April 2023 that will have a significant impact on landlords whose properties are subject to existing leases or tenancies which have EPC ratings of below E. It will be unlawful to continue to let a property which fails to achieve a rating of E, even if the lease came in to effect before 1 April 2023.
To clarify, at present, all buildings across the UK require an EPC unless an exemption applies and currently, the minimum energy efficiency standards (MEES) require new lettings to have a minimum EPC rating of E. From April 2023, the MEES are due to be tightened meaning existing commercial lettings will also require an EPC rating of E. Failure to comply will result in a penalty of up to £150,000.
From 2025, all newly rented commercial and residential properties will be required to have a minimum EPC rating of C. This will be extended to existing tenancies in 2028. By 2030, the MEES are set to require a minimum of B with an interim benchmark of C in 2027.