Landlords - Minimum Energy Efficiency Standards Changes

The remaining provisions of the Minimum Energy Efficiency Standard (MEES) came into force on 1 April 2020 whereby rented properties with an Energy Efficiency rating of F and G must be improved so that a minimum rating of E is achieved (unless an exemption is applied). ARLA Propertymark has created the following guidance.

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 established the MEES which set a minimum energy efficiency level for all domestic private rented properties in England and Wales that are required to have an Energy Performance Certificate (EPC). Where this applies, and the property has an EPC rating of F or G, landlords must take appropriate steps to comply with the requirements of the MEES regulations.

When the MEES regulations were first implemented in April 2018, private landlords could not let properties on new tenancies to new or existing tenants if the EPC rating was F or G (unless an exemption applied).

TENANCY TYPE

From 1 April 2020 the prohibition on letting properties with an EPC rating of F and G will be extended to cover all relevant properties, even where there has been no change of tenancy. Landlords with properties assessed at EPC F and G must now improve the property rating to E or register an exemption if they want to continue to let it.

REMOVAL OF COST EXEMPTION

The validity of all existing exemptions registered on the basis that the landlords could not get any funding for energy efficiency improvements will end for individual properties on 31 March 2020, instead of after five years. Landlords who had registered such exemptions prior to 1 April 2019 will now be required to make improvements (up to £3,500) to ensure their properties achieve EPC E by 1 April 2020 – unless a further exemption is successfully applied for.

NEW FUNDING ELEMENT

Since 1 April 2019, landlords of domestic properties with an EPC rating below E must carry out up to £3,500 worth of works improving their energy efficiency even if they cannot obtain third-party funding to meet the costs.

The £3,500 cap is an upper ceiling, not a target or a spend requirement and landlords may spend more if they wish. If a landlord can improve their property to E (or higher) for less than £3,500 then they will have met their obligation.

If the upgrade to EPC E cannot be achieved for £3,500 or less, then landlords must make all the improvements that can be made up to the cost limit, and then register for an ‘all improvements made’ exemption.

RELEVANT IMPROVEMENTS

The MEES Regulations refer to the concept of ‘relevant energy efficiency improvements’. This is a measure, or package of measures, recommended in the EPC report, which can be purchased and installed for £3,500 or less (including VAT) - the cost cap.

Landlords can install any energy efficiency measures, but if their chosen measures are not on the government’s list of ‘recommended energy efficiency improvements’ and they fail to improve the property to EPC E, then landlords cannot let the property or register an ‘all improvements made’ exemption.

EXEMPTIONS

There are various exemptions that apply to the prohibition on letting a property with an energy efficiency rating below E. If a property meets the criteria for any of the exemptions, landlords will be able to let it once they have registered the exemption on the Private Rented Sector (PRS) Exemptions Register.