The split incentive
Under a typical full repairing and insuring lease the tenant pays for energy. The landlord holds the MEES duty and must fund the works. The measure that pays back in four years pays back to the tenant, while the landlord funds it and waits for a rent review or a sale to recover any of it.
Pointing this out does not solve it, but naming it does change the conversation with an occupier – because the saving being discussed is theirs.
Can you recover it?
| Route | When it works | When it does not |
|---|---|---|
| Service charge | Lease expressly permits improvements, or contains a statutory-compliance or sustainability provision | Older leases limited to repair and maintenance – efficiency works are usually improvement |
| Dilapidations | The works genuinely remedy a breach of the tenant's covenants | Regulatory upgrading of a building in repair. Section 18(1) caps the claim at diminution in the reversion |
| Rent review | Improved building supports a higher rent on review | Where the review disregards voluntary landlord improvements – check the disregards |
| Green lease clause | Negotiated at grant or renewal; shares cost and saving | Cannot be imposed on a subsisting lease |
| Re-gear | Tenant wants term certain; landlord wants the works done – trade them | Where the tenant has no reason to come to the table |
Access is a separate problem from cost
Even where you are funding the work yourself, you may not be entitled to enter the demise to do it. Rights of entry are a matter for the reservations in the lease, and a right to enter to repair does not necessarily extend to entering to improve.
Where the tenant refuses, that refusal – properly sought and in writing – is the foundation of a consent exemption. Which is why a refusal should be documented rather than treated as the end of the matter.
What actually works
- Read the lease before the survey. The recoverability answer changes which measures are worth specifying.
- Take the measures that need no access first – plant, roof, envelope, controls in landlord areas.
- Time the rest to a lease event. A void is the cheapest access you will ever get, and it is the reason our plans are built around lease dates rather than deadlines.
- Put sustainability provisions into every new lease and renewal, even where you cannot fix the existing ones.
- Ask, in writing, and keep the answer. Either you get the access, or you get the exemption.
Sequence the work around your lease events
The Upgrade Plan places each measure at the break, expiry or refurbishment date where it can actually be done – and shows what it costs to do it earlier.
Common questions
Can I recover MEES upgrade costs through the service charge?
It depends entirely on the lease. Many older commercial leases permit repair and maintenance but not improvement, and energy efficiency works are frequently improvement. Some modern leases include an express sustainability or statutory compliance provision.
Can I recover the cost through dilapidations?
Only where the works are genuinely remedying a breach of the tenant's covenants. Upgrading a compliant-but-inefficient building to meet MEES is the landlord's regulatory burden, not a dilapidations item – and section 18(1) of the Landlord and Tenant Act 1927 caps a claim at the diminution in the value of the reversion.
Who pays if the tenant benefits from the energy saving?
This is the central unfairness of the regime as drafted: the landlord bears the capital cost and the tenant banks the saving. Green lease clauses exist to share it, but they have to be negotiated in.
Sources
- Landlord and Tenant Act 1927, s.18(1) and s.19 – legislation.gov.uk
Legislation is cited to the version in force at the date below. We publish a corrections policy and amend pages when the law changes.