Minimum Energy Efficiency Standards (MEES)
In April 2016, The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 brought into force Minimum Energy Efficiency Standards (MEES) in the residential and commercial Private Rented Sector (PRS).
Landlords must act to ensure that their housing stock is up to the required standards, especially in the case of commercial properties where change can take significantly longer to action.
From April 2018, domestic and non-domestic private rented properties which have an Energy Performance Certificate (EPC) rating below an 'E' will require some energy efficiency improvements. Should Landlords fail to comply, they could face some heavy financial penalties. Landlords and their agents if unsure of where they stand should start by commissioning an up-to-date Energy Performance Certificate which will identify the current rating (which may have changed over time), and recommend opportunities for improvement.
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Domestic Minimum Energy Efficiency Standards
As energy assessors will know, an EPC is already required to let or market a property legally, but the new laws introduced as a result of MEES in the Private Rented Sector mean that from April 2018, a property with an EPC rating of 'F' or 'G' will be deemed non compliant and cannot be let within the law. Moreover, landlords with these properties could face financial penalties of up to £5000 for not meeting the minimum standards.
Energy Assessors can help Landlords by comissioning an up to date EPC which will determine the energy efficiency of their existing housing stock. The recommendations from the EPC can also help to clarify potential improvement measures.
Landlord self funding and cost cap- April 2019 (NEW)
The original MEES regulations included a 'no cost to the landlord' provision, which permitted landlords to register a 'no cost to the landlord' exemption on the PRS Exemptions Register. This exemption was available to landlords who were unable to make improvements to their property at no cost to the themselves. Once registered this exemption was valid for five years.
However, from 1st April 2019, the 'no cost to the landlord' provision is no longer available due to ammendments that have been made to the regulations. The changes made include a capped landlord's contribution requirement in the event that third party funding is unavailable. This means that domestic landlords must use their own funding to cover the cost of improving their property to EPC band E. This requirement is subject to a spending cap of £3,500 (inclusive of VAT) for each property.
Those who have already registered for the "no cost to landlord" exemption prior to regulation changes (1st April 2019), will no longer be exempt for five years, and will now need to make the necessary improvements to their property to ensure it meets EPC band E (or as close as possible) by April 2020.
This is change designed to future-proof the regulations and make them as effective as possible, while protecting landlords against excessive cost burdens. With a cost-cap, domestic landlords would only need to see investment in improvements for an EPC F or G rated property up to the value of the £3,500 cap.
The Government's guidance for domestic landlords and local authorities is available to view here.
Non-Domestic Minimum Energy Efficiency Standards
Landlords in the non-domestic/commercial private rented sector will need to act quickly to ensure their properties comply with MEES as energy efficiency improvements to larger commercial properties could take some time to install. As of 2018 the MEES regulations only apply to the granting of a new lease as well as a lease renewal, however, the scope of MEES will expand further in 2023 to include existing leases.
In 2019 the Department for Business, Energy & Industrial Strategy (BEIS) published The ‘Future Trajectory to 2030’ consultation, which proposed a minimum C or B EPC rating by 2030, with suggestions of incremental improvements to reach the preferred rating of B.
Energy Assessors should encourage landlords to get an up to date EPC as soon as possible to determine the energy efficiency of their existing properties. The cost of non-compliance is significantly higher for non-domestic landlords as it is linked to the rateable value of the property- which means it could be as much as £150,000.
Key Dates for MEES
The key dates below underline when the regulations are being enforced, with the regulation scope expanding over a 5 year period from 2018-2023.
1st April 2016
ALL domestic tenants have the right to request energy efficiency improvements to their properties. This applies to domestic properties let under longer term assured and regulated tenancies. Landlords will be unable to refuse consent to a tenants request to make energy efficiency improvements.
1st April 2018
it is unlawful to grant new leases for residential or commercial property with an EPC rating below an 'E'.
1st April 2019
1st April 2020
The regulation will expand to apply to ALL residential privately rented property which are required to have an EPC.
1st April 2023
The Non-domestic MEES regulations will be extended to include ALL existing commercial leases.
1st April 2030 (Proposed Future Trajectory for non-domestic MEES)
Option 1: that all non-domestic privately rented buildings achieve a minimum energy efficiency standards of EPC B by 1 April 2030, OR
Both options include incremental steps towards a C or B rating, such as buildings achieving a D rating by 2025.