From APR-18 a new Minimum Energy Efficiency Standard will apply to rented residential property, linked to the EPC (Energy Performance Certificate) required to let or sell a property in the UK. This post explains the key dates, requirements and steps you need to take in order to avoid being caught out.
What is MEES?
The minimum energy efficiency standard (MEES) was introduced in March 2015 by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. The MEES Regulations originate from the Energy Act 2011 which contained the previous coalition government’s package of energy efficiency policies including the Green Deal.
It will be unlawful to to let residential or commercial properties with an EPC rating of ‘F’ or ‘G’ (i.e. the lowest 2 grades of energy efficiency).
You can view the Govt guide here: Landlord Guide
What are the requirements?
The minimum energy efficiency standard is set at an EPC rating of ‘E’.
From 1-APR-18 the regulations will be enforced upon the granting of a new lease. Landlords are liable for ensuring compliance before the lease is granted. In special circumstances, Landlords will be given an extension of six months from the date of the grant of the lease to comply with the regs.
From 1-APR-20 the Minimum Energy Efficiency requirement will apply to continuing tenancies (renewals) where there is a valid current EPC for the property, and an EPC is legally required to be in place
Are there any exemptions?
Landlords will be exempt from having to comply with MEES if they can demonstrate one of the following: All cost-effective energy efficiency improvements, either within a seven year payback or under the Green Deal’s “Golden rule”, have been carried out. Consent to undertake works is refused by a third party, such as a Local Authority or an incumbent tenant. A suitably qualified expert provides written advice that the improvements would result in a devaluation of the property by 5% or more, or that the works would damage the property. Exemptions last for five years and will need to be lodged on a centralised register to be created by Government.
Are there any penalties?
The regulations will be enforced by Trading Standards Officers. Penalties will be based on the rateable value of the property, up to a maximum of £150,000, per occasion. Most likely a civil penalty of £4,000.
What are the likely implications?
It will make some properties illegal to let unless they are upgraded to meet the minimum standards. It is estimated that approximately 20% of non-domestic properties are in the ‘F’ and ‘G’ rating brackets. Valuations of such properties could be affected if their marketability is diminished. Rent reviews for properties in this situation could also be affected. Implications for dilapidations assessments may also exist.
What can you do?
There is a high likelihood that the minimum energy standards proposed for 2018 will be raised in the future and Government is committed to implementing this policy. With the implementation of the minimum energy standards legislation less than 3 months away, time is short to minimise risk. We suggest the following immediate actions:
- All property assets need to have a valid EPC.
- Where the EPC rating is ‘F’ or ‘G’ (or is at risk of becoming so) an “Energy Efficiency Plan” should be put in place to improve the energy efficiency of the property. This should include assessing the costs and benefits of improving energy efficiency and weighing these against other impacting factors within the business plan for the property.
- Energy efficiency improvements should take advantage of void periods, lease breaks and/or be included as part of the on-going maintenance and renewal programme.
What can Bishop Sullivan do to help?
- Procure and manage any necessary improvement works.
- Provide energy performance reports and ratings for statutory compliance and for marketing purposes.
If you need any assistance letting your property in Brighton, Hove, Kemptown and surrounding areas or if you just have some general queries please feel free to contact us on +44 (0)1273 646426 or lettings@bishopsullivan.co.uk
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Best Regards,
