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New EPC ruling (MEES)

Minimum Energy Efficiency Standard (MEES)
From 1st April 2018, all landlords of privately rented domestic and non-domestic property in England or Wales must ensure that their properties reach at least an Energy Performance Certificate (EPC) rating of E before granting a new tenancy to new or existing tenants. The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 establish a minimum level of energy efficiency for privately rented property in England and Wales.

Trigger Dates
1 April 2018 – It will be unlawful to grant a new agreement with an EPC rating below an ‘E’, including a statutory periodic agreement. From this date a rating below an ‘E’ will be a ‘substandard property’. It is the substandard properties that we are interested in as it will be these properties that may be restricted.

1 April 2020 – Landlords must not continue to let a substandard property, even to an existing tenant. The regulation will apply to ALL residential privately rented property which are required to have an EPC. This will not require all properties banded F or G to be removed from the market.

The key issue to remember is that an EPC is only legally required when a property is being advertised to let or for sale, this is at the point at which the rating will be required to be sufficient to satisfy MEES.

Current Requirements

  • The minimum energy efficiency standard is set at an EPC rating of ‘E’
  • All non-domestic property types are in scope of the regulations, except for those that do not require an EPC under current regulations, such as listed buildings
  • The regulations apply to sub-lettings and assignments

Current Exemptions

Landlords will be exempt from having to comply with MEES if they can demonstrate one of the following:

  • All improvements have been made to the property that can be made but it remains a band F or G.
  • There is no funding available for the improvements needed. This is due to the basic rule being that improvements needed should not have to be funded by the landlord.
  • Consent to undertake works is refused by a third party, such as a Local Authority or the 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 cause damage to the property
  • Exemptions last for five years and will need to be lodged on a centralised register created by Government.
  • Exemption of 6 months for a new landlord taking ownership of a property. Evidence will be required of the purchase.
  • Causing damage to the property, i.e. wall insulation resulting in damage to the wall. Evidence from a specified professional will be required

Consultation
On 28 December 2017 the Government launched another consultation regarding MEES. The discussion is around whether landlords should be required to fund some improvements and if so, how much should they fund.  The current proposal is for landlords to fund improvements to the ‘total value’ of £2,500 per property. ‘Total value’ means that this would be £2,500 including any Green Deal or ECO funding, therefore should £1,000 be available by one of those sources then the landlord would have to spend up to £1,500. This could have a big impact on many landlords with portfolios of multiple properties.