As a reminder, the deadline of 1st April 2018 has now passed, therefore, Landlords are legally required to comply with the Minimum Energy Efficiency Standards.
The Minimum Energy Efficiency Standards (MEES) were introduced by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 in March 2015.
What does this mean for Landlords?
If you have a domestic property which has an Energy Performance Certificate with a band below an ‘E’ rating then you will not be allowed to let your property if it is:
- A new letting where the assured tenancy will commence after 1st April 2018
- A renewal of an assured tenancy to existing tenants after 1st April 2018
- An assured tenancy which would become periodic after 1st April 2018 (when the initial term expires)
- An agricultural occupancy tenancy which will either commence, be renewed or become periodic after 1st April 2018
If the EPC indicator is a band ‘F’ or ‘G’ then the Landlord will be required to make relevant energy efficiency improvements to bring the Energy Performance to an ‘E’ or above.
If the EPC rating is still below an ‘E’ rating after the landlord making the relevant improvements that can be made to the property, then they can apply for an exemption which must be registered on the National PRS Exemption Register.
Other exemptions are available:
- When no improvements could be made to increase the rating to an ‘E’
- When consent from a third party or planning/Listed Building Consent is required, and consent could not be obtained or was granted but subject to conditions, or the Landlord could not carry out the proposed improvements without the tenants consent.
- A report from an independent Royal Institution of Chartered Surveyors (RICS) confirms that the capital market value of the property would be devalued by more than 5% due to the installation of specific energy efficiency measures.
- When a recommended measure is not a “relevant energy efficiency improvement” as the cost of purchasing and installing it could not be wholly financed at no cost to the Landlord through the Green Deal Scheme. The Government have however, proposed amending the legislation to remove the ‘no cost’ principle for Landlords. They are proposing to replace this with a contribution element from Landlords setting a limited cap of £2,500 includes VAT and grants available per property.
- When complying with the Minimum Energy Efficiency Standards would unacceptably alter a Listed Building or Building in a Conservation Areas appearance or character and damage their special interests.
When are EPC’s not required and you are outside scope of the MEES?
- If the property was let before 1st October 2008 and the tenant has remained the same.
- Furnished Holiday Lets (where the property is occupied for less than 4 months per year).
- At present it is understood that Farmhouses and farm cottages let under an Agricultural Holdings Act 1986 or Farm Business Tenancies 1995. However, If properties are sublet by the farm tenant then an EPC may be required and the farm tenant is likely to be responsible for this.
- A succession of a Rent Act 1977 or Rent (Agriculture) Act 1976 protected tenancy.
The majority of exemptions are available for 5 years however, if the property is sold during this period then the exemptions would not be transferred.
What are the risks?
If the Landlord is found to be in breach they can be subject to a financial penalty enforced by the Local Authority, who determine the amount as well as a potential publication penalty.
The caps on individual penalties are:
- £2,000 fixed penalty for properties which have been let for a period of less than 3 months which are in breach of the MEES regulations.
- £4,000 fixed penalty for properties which have been let for a period of more than 3 months which are in breach of the MEES regulations.
- £1,000 where the Landlord has registered false information on the PRS Exemption Register
- £2,000 where the landlord has failed to comply with the compliance notice.
A total cap of £5,000 applies where there are a combination of breaches.
How do you know if your property has a valid EPC certificate?
A EPC is only valid for a period of 10 years once it is lodged on the EPC Register. After the expiry of this term, a new assessment will need to be undertaken by an accredited Energy Performance Assessor if there is to be a new tenant or the property is to be sold.
To check your properties EPC rating, you can use the properties postcode on the EPC Register website.
Planning for the future
As from 1st April 2020, all domestic properties with existing tenancies will need to satisfy the requirement of having an EPC rating above an ‘E’ or have a valid exemption. Non-domestic properties will need to satisfy the MEES by April 2023. These deadlines will approach quickly as the 2018 deadline did and therefore when undertaking works to properties the Energy Performance of the property should be kept in mind throughout.
In addition, the Government have previously declared their proposals to raise the standards further, lifting the bands to Band D by 2025, and Band C by 2030.
The Government guidance can be found here.