Domestic MEES: What Landlords and Tenants need to know
The government aims to make privately rented homes more sustainable. With the current Minimum Energy Efficiency Standards (MEES) undergoing significant changes, both landlords and tenants must prepare to adapt to stricter regulations and evolving metrics in Energy Performance Certificates (EPCs).
The Current Framework
Under MEES regulations, domestic private rented properties are required to achieve an EPC rating of at least Band E. This policy ensures landlords cannot grant new tenancies for properties rated EPC F or G (a rule that came into effect on April 1, 2018) and extended to all tenancies by April 1, 2020. To comply, the maximum required investment on energy efficiency upgrades by landlords is capped at £3,500 (including VAT) per property, or register an exemption where improvements are unachievable.
While Domestic MEES provides a framework for landlords and tenants to navigate energy efficiency requirements, the landscape is shifting in the pursuit of higher standards.
Proposed Changes and Timelines
The DESNZ consultation, “Improving the Energy Performance of Privately Rented Homes in England and Wales,” lays out ambitious timelines for tightening regulations:
- 2025: DESNZ will respond to consultations on MEES changes and reforms to the energy performance of buildings regime, whilst also consulting on the proposed Home Energy Modelling (HEM) for producing new EPC metrics.
- 2026: DESNZ hope to publish details and begin the process of introducing the HEM methodology. If this new methodology is introduced this would bring with it a new EPC potentially displaying new metrics.
- 2028: All new tenancies in the private rental sector must achieve an EPC rating of Band C.
- 2030: The Band C requirement will extend to all tenancies, covering the entire private rental market.
Elmhurst is currently in the process of responding to this consultation which is set to close on 2nd May 2025.
EPC Metrics used within Domestic MEES
The Consultation suggests the Government are favouring a requirement to meet a primary standard set against a fabric performance metric, then a secondary standard set against either smart readiness or heating system metric.
- Fabric performance metric focusing on improving the building fabric, such as solid wall insulation, loft insulation, underfloor and windows.
- Heating system Metric would focus on the efficiency and emissions of the heating and hot water systems. This metric would incentivise energy efficient low carbon options, such as heat pumps and solar water heating.
- Smart Readiness would assess energy performance based on optimisation of the buildings energy useage and ability to integrate with a flexible energy system. Examples may include smart meters, batteries and solar panels.
Challenges for Landlords and Tenants
While these changes promise a greener future, they also introduce complexities. For landlords, meeting stricter EPC requirements poses financial and logistical hurdles, particularly for older or off-grid properties. Achieving Band C will require substantial upgrades, such as enhanced insulation and transitioning to cleaner energy systems; changes that may be challenging or expensive for some.
As well as this, the government is proposing a significant rise in the cost cap from the current £3,500 to £15,000 per property. This new cap would represent the maximum total investment landlords are expected to make in order to meet both the fabric performance standard and either the smart readiness or heating system standard. According to current government estimates, upgrading a property to meet these requirements will cost between £6,100 and £6,800; a substantial increase on the current £3,500 cap. Landlords will still have the option to register for an exemption if the cost of improvements would exceed the £15,000 cap.
For tenants, understanding the energy efficiency of their homes becomes vital. Improved standards aim to reduce running costs, directly addressing fuel poverty, which disproportionately impacts the private rented sector (PRS). Tenants will need clarity about how these reforms affect their living conditions and affordability.
How do Fuel Prices factor in?
The EPC system, underpinned by the Reduced Data Standard Assessment Procedure (RdSAP) methodology, plays a critical role in assessing fuel prices and energy affordability. These prices remain constant until the methodology is updated. The forthcoming RdSAP 10 changes will maintain the current fuel prices used in the previous version of RdSAP (9.94).
The fuel prices used to display information directly on EPCs such as potential savings and predicted energy costs, are updated every six months using data that aligns with average costs and therefore provides more accurate insights into running expenses – though it must be stressed these are ‘predicted’ costs, based on a set of assumptions about the energy usage of the property.
The disparity between gas and electricity costs does indeed create a challenge for landlords. Gas, being substantially cheaper, often results in better EPC ratings for properties using gas heating, while electricity, despite its potential for decarbonisation, is more expensive and can negatively impact an EPC.
The proposed shift toward decarbonisation envisions cleaner energy systems, such as electric heating powered by renewable energy, becoming a normal occurrence. However, in the short term, these systems are likely to come with higher running costs, further challenging landlords aiming to meet EPC targets. The hope lies in the long-term outlook, where increased renewable energy adoption could drive down electricity costs, while gas prices are expected to rise due to carbon taxes and other policy measures.
This transition reflects the broader goals of reducing emissions and combating climate change. Nonetheless, it underscores the need for support mechanisms, be it financial incentives, cost caps, or clear guidance to help landlords navigate this shift while balancing affordability for tenants.
Elmhurst’s Thoughts
Elmhurst believe there is a delicate balance between providing comprehensive guidance and keeping regulations simple. Landlords and tenants alike benefit from clear, straightforward rules. However, increasing complexity risks overwhelming them, making compliance and decision-making harder.
We also believe that to support a smooth transition, the fairest approach would be to allow landlords holding valid C band EPC to remain compliant until the certificate naturally expires under the current validity period. However, this is closely tied to any changes made to validity periods as part of the ongoing EPC reform. It’s important that landlords are encouraged to proactively upgrade their properties, rather than relying on historic EPC data which, in some cases, could mean delays to improvements of up to 10 years.
Providing clear and timely guidance is crucial to assist both landlords and tenants in understanding and adapting to the changes. Ambitious energy efficiency targets must be balanced with practical expectations for upgrading properties, particularly those with structural or technical challenges. Maintaining a consistent framework and emphasising clarity will help advance progress while reducing potential disruption for landlords and tenants.
Domestic MEES Consultation
Read Elmhurst’s full draft response to the consultation below or submit your own response to this important consultation to ensure your thoughts and opinions can be seen by Government. The deadline for responses is Friday 2nd May
READ ELMHURST'S RESPONSE > SUBMIT YOUR OWN RESPONSE >