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Straight Talking About Listed Property, EPCs and MEES

Dec 14, 2017

Straight Talking About Listed Property, EPCs and MEES

In the property industry's chatter ahead of the regulatory changes governing the lawful letting of premises rated below Band E from next April, Martin Hughes of Barker Storey Matthews recommends playing it straight when it comes to Listed property.

There has been a flurry of debate this winter in the property industry about the peculiarities of Listed properties in complying with the forthcoming lettings regime. 

It was 2011 when the Energy Act was passed in the Houses of Parliament. Subsequently, the (Minimum Energy Efficiency Standards (MEES) Regulations of 2015 ) confirmed that properties with an EPC rating of F or G are considered sub-standard and will be regarded as unlawful to let from 01 April. So far, so straightforward.

There is a common misconception that Listed buildings are wholly exempt. However, the best-measured advice from experienced and accredited energy assessors is that landlords of Listed premises should always play it safe: get an EPC and take professional conservation, property and legal advice in considering options on letting Listed assets not making make the Band E requirement.

No legislation is perfect and there are many in the property industry who have been critical of MEES regulations in the round, setting aside what could be described as the ‘Listed conundrum'. 

An added complication is that not all of the elements of any one building may be Listed. There may just be particular features in, or of, the building or its façade or within the property's curtilage with Listed designation.

Then, if justified, the reasonable case for a Listed property's exemption from MEES compliance may be made where appropriate to the extent there would be an adverse impact on the historical heritage of the building in question through completing the required works.

The EPC report should not include recommendations which are void because of the building's Listed nature. For instance, external insulation would not be appropriate in most cases for a Grade II Listed building.

There is no current intention to prohibit selling freehold commercial property with vacant possession where it ranks below Band E but this policy position cannot be guaranteed in perpetuity. However, clearly, the costs for improving an EPC which is below MEES will be a key factor in a purchaser's decision making and, ultimately, the price offered.

Professional energy assessors advise that problems with any property to let from next April - not just those with Listed designation - performing below the mandatory energy efficiency standards are not, necessarily, insurmountable. 

Review of lighting, renewal of a boiler or more modern heating controls or installation of loft installation may not be expensive or even wholesale within any premises to ensure MEES compliance. Crucially, when it comes to Listed properties, these also need to be compliant with planning and conservation restrictions.

With the exception of the highest performing Grade A premises, there is the argument for room for improvement of energy performance in most properties. The added complication for Listed premises is the need to seek conservation advice - whether from the local authority or from specialist, qualified heritage consultants - where upgrading to meet standards for lettings is recommended.

The starting point has to be an energy assessment. What a landlord then decides to do with a Listed property to let will be a decision that needs to be made with expert input and advice.

There will, undoubtedly, be test cases in the courts but by playing it straight from the outset, litigation in this - as in most instances - is best left to those who can afford to lose.

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