On the horizon: MEES and the Building Safety Act

In the first edition of this new quarterly column, Bill Chandler previews some of the most significant legal developments expected in the coming weeks and months Why always MEES? On 1 April 2023, it will become unlawful for landlords to continue to rent out environmentally “substandard” commercial premises. The Minimum Energy Efficiency Standards have made it unlawful to grant new leases of substandard premises since 2018, and this was extended to existing residential leases in 2020. This latest development extends the net to subsisting commercial leases that were granted before 2018, or whose EPC rating has fallen below the required standard since the lease was granted. “Substandard” still means that the premises have an EPC rating lower than E. The same exemptions apply, so that landlords only have to carry out cost-effective works and are not required to achieve the minimum acceptable rating by any means. And the maximum fine remains at £150,000. But commercial property landlords will need to make sure that by 1 April they have either improved all their F/G-rated properties, or have identified an exemption (and, crucially, registered it on the central exemptions register). The extension of the regime to existing commercial leases represents the final iteration of the MEES scheme as originally implemented. But 1 April 2023 does not represent the end of the story by any means; it is merely the end of the beginning. Setting the minimum standard at E was only ever a starting point and the government intends to raise the bar significantly, requiring millions more properties to be improved by the end of the decade. Previous consultations proposed increasing the minimum standard to C for residential leases and B for commercial properties. The next key date is expected to be 1 April 2025, from when the requirement for new residential leases will increase to C and the first compliance window for commercial premises will open ahead of the jump to C in 2027. Those consultations closed in 2021. However, despite its self-proclaimed “climate emergency” the government has frustratingly still not confirmed the roadmap and enacted the necessary legislation to drive it forward. Property owners really cannot afford to wait. Those who are not already planning for the next phase are best advised to proceed on the basis of the proposals detailed in the consultations. Heated conversations on climate change While MEES and other green initiatives concentrate on minimising the effect of our real estate on the climate, there is a growing concern over the impact of the climate on our real estate. Will that house we are buying, or that shop we are renting, face greater risks from flooding, subsidence or other risks in 10/20/50 years’ time because of climate change? A conversation has broken out over the extent to which lawyers have a duty to advise real estate clients on such climate change risks. As with environmental risks, any such duty must reflect the reality that lawyers are not scientists. Watch out for a Law Society practice note on this issue anytime now. In the meantime, the leading environmental search providers are busy launching and refining their climate change products, whether embedded in existing environmental reports or standalone. But are they responding to a need, or creating one? Expect to see movement on this important issue, and hopefully the evolution of a market consensus. BSA juggernaut marches on The 18-month implementation of the gargantuan Building Safety Act 2022 continues apace. One of the key provisions of the Act is the requirement for all occupied higher-risk buildings to be registered with the new Building Safety Regulator (in reality, the Health and Safety Executive). A higher-risk building is a building which is at least 18m high or which has at least seven storeys, and which contains at least two residential units. There are an estimated 12,500 higher-risk buildings in England. HSE has announced that the register will open for business in April 2023. This will trigger a six-month window in which all existing occupied higher-risk buildings must be registered. Registration is the responsibility of the principal accountable person (usually the building owner or management company), who will be committing a criminal offence if the building remains unregistered come October. The principal accountable person must also submit key building information with the application, or within the following 28 days. The six-month window to register existing buildings closes in October. From then on, all new higher-risk buildings must be registered before they can be occupied. October 2023 will also see the BSR become the building control authority for higher-risk buildings, as well as the opening of new registers of building inspectors and building control approvers. Beyond the horizon Developments to look out for in the longer term include: Leasehold reform: Michael Gove recently reaffirmed the government’s commitment to reforming the “fundamentally unfair” long residential leasehold system, although the delay of the King’s speech means that realistically we can expect little progress until the autumn. Renters’ Reform Bill: after several years of promises, will 2023 finally see this legislation put in place and no-fault evictions outlawed? Business tenancies: maybe we’ll finally see the eagerly-awaited review of the Landlord and Tenant Act 1954 that an over-optimistic government promised at the height of the pandemic in 2020 – but I’m not holding my breath. Court-side, we await the Supreme Court’s decision in the long-running litigation relating to the Manchester Ship Canal, the case having been heard on 6 March, when it broke new ground by sitting for the first time in Manchester. Bill Chandler is a professional support lawyer at Hill Dickinson LLP Image © Pexels/Kellie Churchman