The impact of Minimum Energy Efficiency Standards on dilapidations claims

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES Regulations) were said to be aimed at improving energy efficiency to help England and Wales meet their CO2 reduction targets. Not only do they have the potential to severely affect one’s ability to let premises based on Minimum Energy Efficiency Standards (MEES), but also provide new strategic options with regards to dilapidations and other areas of landlord and tenant dispute. As the MEES Regulations have applied to all new leases for a year, arguments concerning energy enhancements are now part of discussions between landlords and tenants regarding dilapidations at lease end, despite a lack of enforcement action to date. This paper summarises the relevant parts of the MEES Regulations, which rely on the pre-existing Energy Performance Certificate (EPC) regime to determine a property’s energy efficiency standard. The problems of using EPCs as a benchmark are highlighted, as are some potential tactical opportunities for those involved in landlord and tenant disputes. The paper discusses the current and potential impact of the MEES Regulations on the different elements of a commercial lease-end disrepair claim. It also addresses disputes under other tenant covenants concerning the condition of the demised premises, both mid-term and at lease end. Further, it suggests some methods that might be adopted to mitigate the impact of the MEES Regulations on both landlords and tenants.