Landlords have less than four months to ensure their rental properties meet the new Minimum Energy Efficiency Standards (MEES).

Here we’ll explain how the new MEES will work in regards to EPC ratings, the impact the rules will have on landlords, and the steps that you should take now to avoid hefty fines.

Do you know what your EPC rating is?

Properties are graded from A - G to show how efficiently a home uses energy.  As of April 2018, all buildings within the scope of MEES must have a minimum Energy Performance Certificate rating of E, or they will be illegal to rent out.

In other words, any homes rated F or G must be improved or immediately taken off the rental market - unless the landlord registers an exemption.

What are the penalties?

An alarming 1 in 10 residential properties currently have an EPC rating of F or G and so would not meet the new standards.

A civil penalty of up to £4,000 will be imposed for breaches, so it’s important you make sure your rental property meets energy efficiency standards.

Are there any exemptions?

The government has recently announced that they will be opening an exemptions register from next month, which should shed more light on the matter.

However, we already know that the new minimum energy efficiency standards will NOT apply to:

• Buildings which are not required to have an EPC, such as certain listed buildings

• Temporary properties and holidays lets or Airbnb rentals

• Buildings let on tenancies of over 99 years or less than 6 months (where such tenancy does not contain a right of renewal)

• Where an independent surveyor determines that the relevant energy efficiency improvements would reduce the value of the property by more than 5%

• The improvements are deemed financially unviable as they do not pay for themselves through energy cost savings within a 7 year time frame

• If the landlord is unable to get consent from a third party to carry out the energy improvements, for example from the local authority or an incumbent tenant

• A detached building with a total floor space under 538 sft

• A building that is due to be demolished by the seller or landlord and they have all the relevant planning and conservation consents

All other rental properties will have to meet the new MEES rules.

So what should landlords do?

Clearly landlords will want to avoid fines, so now is the time to make sure your rental property meets the new standards. We suggest the following actions:

There is a high likelihood that the minimum energy standards proposed for April 2018 will be raised in the future - so it’s certainly worthwhile assessing your rental property’s energy efficiency now.

If you have F or G rated EPC you must take urgent action.

The first thing you should think of doing is commissioning a new EPC as the software and calculations have been upgraded.  The Building Research Establishment (BRE) estimates that around 100,000 PRS homes will be upgraded into Band E, and therefore meet the new standards.

If your property still needs Energy efficiency improvement to meet the minimum standards, then these works will need to be implemented before April 2018.

It is quite a common misconception amongst landlords that they need to upgrade the insulation levels of their building, such as a new roof or double glazing, on older properties.  It is certainly true that better insulation levels equates to better energy efficiency.  However, there are many other factors that will affect the rating, including type of lighting, heating system efficiency, heating system fuel and also, critically, the activities that go on within the building.

Those in band E

Landlords should look carefully at their premises and carry out any less disruptive and cost-effective works as soon as they can, and they consider scheduling in other energy refurbishments over the medium term.

Premises below a band C should consider undertaking all cost-effective energy improvements whenever undertaking major refurbishment or significant works at their properties.

The average rating across the UK is thought to be D.  The recently published Government’s Clean Growth Strategy indicates that they will be shortly looking at increasing the energy efficiency standards that will apply to the domestic PRS – probably increasing the minimum EPC band at which premises may be let over the coming years. So this is something to keep your eye on for the future.

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