The purpose behind Minimum Energy Efficiency Standards was to reduce emissions from buildings by targeting the private rental sector. The UK has strict climate change targets to meet, so energy efficiency improvements to the estimated 300,000 “sub-standard” residential rented properties (those with an energy rating below E), would hopefully make a dent in those targets.
Part 3 of the MEES Regulations prohibits landlords from granting new tenancies of sub-standard residential properties on or after 1 April 2018, and from continuing to let those properties on or after 1 April 2020, without making sufficient improvements to the property to increase the rating to E or above, or registering an exemption.
- The tenant refusing to give consent to works which would improve the rating;
- An independent surveyor’s report confirms that energy improvements would potentially reduce the value of the property by more than 5%;
- A temporary six-month extension for new landlords taking on an existing sub-standard property;
- All relevant energy improvements have been made (i.e. those that can be made at 'no cost' to the landlord because they can be financed under a scheme); or
- All relevant improvements have been made and the property is still sub-standard.
The 'no cost' principle has been a popular exemption due to the withdrawal of the government's Green Deal and the lack of suitable alternative funding. However, from 1 April this year, 'no cost' has been replaced with a £3,500 cap. If the estimated cost of the improvements is less than £3,500, this exemption will no longer apply.
Fines can be up to £5,000 per property and landlords agreeing tenancies of sub-standard property without an exemption also risk being advertised on the Local Authority’s 'name and shame' list if they are investigated.
If you are acquiring a residential property portfolio and require specialist advice, speak to a member of our Real Estate team across our 13 offices. To view other posts in our Business Blog series, please see https://business.freeths.co.uk/.
What do the MEES regulations say? Under the domestic MEES regulations, properties rented out in the private sector must have a minimum energy performance certificate (EPC) rating of E or above, effectively rendering new tenancies for the draughtiest homes at levels F and G unlawful since April last year. The rules, aimed at cutting both energy bills and emissions, apply initially to new tenancies or contract renewals, but by 2020 will apply to all domestic rented properties on the market and by 2023 all commercial properties. To date, though, landlords have been able to apply for exemptions to the MEES regulations. Specifically, F and G rated properties did not have to be brought up to scratch unless improvements could be wholly financed at 'no cost' to the landlord ....