With 2018 now in full swing, the Minimum Energy Efficiency Standards (MEES) are now mere months away. As of 1 April this year, under the Energy Efficiency Regulations 2015 in the Energy Act 2011, landlords with any property that tests below a band E will be prevented from granting a new lease and renewing or extending existing leases. What’s more, come 2020 and 2023 respectively, residential and commercial property that does not comply will be legally uninhabitable. What then does this mean for both landlords and tenants when it comes to dilapidations?
First and foremost, the failure to achieve an E rating is not in itself a breach of repairing covenant. While a tenant is obliged to leave the building in a good condition, it is not their responsibility to ensure it acts in accordance with MEES, especially if it was not compliant in the first place. Consequently, there is no obligation in the Act to upgrade a property, rather, it simply prevents non-compliant property from being leased.
Furthermore, the tenant’s duty to ensure that the building is up to scratch following the tenancy can be superseded by any works that the landlord might need to carry out in order to achieve the right level of energy efficiency. So, for example, if the air-conditioning system in an office building needed replacing to achieve a band E rating, then there would be very little point in the tenant carrying out repairs under dilapidations to services if they were likely to be ripped out once the landlord began the necessary upgrading works. For this reason, the landlord would not have suffered financial loss due to dilapidations, so there would be no claim.
Therefore, the implication of MEES on dilapidations is quite significant and has not gone unnoticed. Having just published its sixth edition in December last year, Dilapidations: The Modern Law and Practice by Nicholas Dowding and Kirk Reynolds, the seminal text of the dilapidations world, now makes reference to these changes in time to help those who may be affected. By seeking proper advice, tenants should be able to avoid serious costs as landlords look to make substantial changes to their properties to prevent being penalised come April.
What’s perhaps most important is that people understand that this is not another string to a landlord’s proverbial bow. However, tenants need to make sure that they are properly advised to make sure that they are not paying for something for which they have no liability.
Read more: A layman's guide to dilapidations