Minimum Energy Efficiency Standards and EPC ratings are important considerations for landlords to comply with legislation and ensure that their properties are energy efficient. Not only do the Regulations have an impact at a personal level but at a wider level, both on the environment and helping the Government towards its environmental targets. In this article, we explain what the MEES’s are and what, if anything, landlords need to do under the Regulations.
What Are Minimum Energy Efficiency Standards?
First introduced in March 2015 under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and then coming into force in April 2018, MEES’s are the minimum energy efficiency levels, both set and enforced by the Government, for domestic private rented properties. The standards apply to all domestic private rented properties that have a legal responsibility to have an Energy Performance Certificate (EPC), such as those that have been let or marketed for sale in the past 10 years and are let on specific types of tenancy agreement, such an assured, regulated, or domestic agricultural tenancy.
Under the regulations, properties that fall under the tenancy types detailed must hold an EPC rating of ‘E’ or above. Properties that don’t meet the previous stipulations may continue to rent out a property of any EPC rating.
Why Do The Minimum Energy Efficiency Standards Exist?
The focus of the energy efficiency standards is to improve the energy efficiencies of properties so that they essentially lose less heat and so consume less gas or electricity to keep them warm, this then reduces CO2 emissions. Housing contributes around 21% of all CO2 emissions; therefore, the Government have focused upon trying to make the UK’s housing stock more energy-efficient, in order to being better able to reach their carbon reduction targets. In a two-pronged strategy, Building Regulations that cover new properties will ensure that they meet the current energy efficiency standards and the MEES will ensure the same in older buildings throughout England and Wales.
As the EPC rating is a consideration for both buyers and tenants alike, any home improvements to increase an EPC rating to E or above will add value to a property for a landlord
If My Property Has a Rating of F or G, What Can I Do in Order to Comply?
It has been law that since 1 April 2020, a landlord can no longer let or continue to let properties that are covered by the MEES Regulations if their property has an EPC rating below E, unless a valid exemption exists for the property.
Therefore, since April 2020, if you wish to let a property with an EPC rating of F or G, you will need to improve the rating of the property to an E at a minimum before entering into a new tenancy agreement, renewing an existing tenancy under a new contract or continuing an existing tenancy without a new contract. The alternative is to declare an exemption.
If you are currently renting a property with an F or G rating you must take immediate steps to bring the property up to a rating of E. The legislation puts a cap on the maximum amount to be spent on improvements and this is £3,500. If you have spent £3,500 on improvements, but the rating is still not at an E rating you can apply for an “all improvements made” exemption. This exemption lasts for 5 years and then more improvements will be needed.
The high-cost exemption allows a landlord to register an exemption to compliance if the cheapest improvement option alone costs more than £3,500. You will need to provide 3 quotes from approved installers to prove this. Again, this exemption only lasts 5 years.
The Wall insulation exemption applies if the only improvements that can be made are Cavity wall insulation, internal wall insulation or external wall insulation and you have a statement from an expert confirming that this would negatively impact the structure of the property.
A third-party exemption comes in if you need someone else’s permission to carry out the improvements and despite reasonable attempts this permission has not been granted or was granted with conditions you cannot meet.
Property devaluation can be applied for if the improvements would devalue your property by more than 5%. You will need a report from a qualified surveyor to support this.
Are There Any Penalties if I Do Not Take Action?
The MEES Regulations are enforced by Local Authorities who have the power to impose civil penalties, determined by the property’s value as follows:
- up to £2,000 and/or publication penalty for renting out a non-compliant property for less than 3 months
- up to £4,000 and/or publication penalty for renting out a non-compliant property for 3 months or more
- up to £1,000 and/or publication penalty for providing false or misleading information on the PRS Exemptions Register
- up to £2,000 and/or publication for failure to comply with a compliance notice
The maximum amount you can be fined per property is £5,000 in total.
Further information on MEES for landlords can be found here on the Government website.
As a landlord it is your legal duty to ensure that any applicable rental property complies with the MEES regulations and there are hefty fines associated with non-compliance. If you have any doubt as to whether your properties comply it is advisable to seek legal advice.