Minimum Energy Efficiency Standards (MEES) Regulations – Protecting Your Assets

Our team: Kirsty Smith

From 1st April 2018, there has been a requirement under the MEES Regulations for any new tenancies or tenancy renewals of properties rented in the private rented sector, whether commercial or residential, to have a minimum energy performance rating of ‘E’ on an Energy Performance Certificate (EPC). Since 1 April 2018 it has therefore been unlawful for a landlord to let a “non-compliant” or “sub-standard” building that has an EPC rating of F or G.

What next? 

From 1 April 2020, the MEES will be tightened even further and will apply to all existing tenancies, even where tenants are staying in place. This means that it will be unlawful to rent a property (regardless of whether it is a new tenancy, a renewal tenancy or an existing tenancy) which breaches the requirement to have a minimum E rating on an EPC and a landlord must carry out works to bring the EPC rating to E or above, unless there is an applicable exemption.

Do I benefit from an exemption?

If your property is caught by the EPC regime, you must comply with the MEES Regulations, unless you can rely on one of a few exemptions available to landlords, including but not limited to:

  1. Exemption due to devaluation – a temporary exemption of 5 years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of the property by more than 5%;
  2. Exemption for new landlords – if a person becomes a landlord recently or suddenly in specified circumstances under the MEES Regulations, a temporary exemption of six months will apply; and/or
  3. Third party consent – if a landlord cannot obtain necessary third party consents to improve the EPC rating of the property (including but not limited to lender consent, superior landlord consent and/or tenant consent), then a landlord may let a “sub-standard” property.

A landlord wishing to rely upon an exemption must register an exemption on the online Private Rented Sector Exemptions Register. Local authorities give and keep these fines and so are incentivised to enforce the legislation.

What if I don’t comply with the MEES Regulations?

If a landlord fails to comply with the MEES Regulations, there are financial penalties, which vary depending upon the length of the breach.

A landlord renting out a “non-compliant” property (less than three months in breach) may be fined up to either £5,000 or 10% of a rateable value up to a maximum of £50,000, whichever is greater.

A landlord renting out a “non-compliant” property (three months or more in breach) may be fined up to either £10,000 or 20% of the rateable value up to a maximum of £150,000, whichever is greater.

There is also a fine of up to £5,000 for providing false or misleading information, or failing to comply with a compliance notice.

What should I do? 

The tightening of the MEES Regulations imposes further onerous obligations on landlords operating within the private rented sector.

If you have a property with an EPC rating of F or G then unless one of the exemptions referred to above applies, you should begin preparing now for the extension of the regulations to existing tenancies to take effect on 1st April 2020.

As the deadline fast approaches, landlords would be well advised to consider the following, in order to protect their assets:

  1. Review your property or property portfolios to identify whether or not properties are compliant;
  2. Consider the cost and extent of any works required;
  3. Consider access to the properties (lease terms permitting) to carry out works required to bring the properties up to the minimum ‘E’ rating; and
  4. Consider whether any exemptions may be relied upon.

Failure to do so will impact upon landlords’ abilities to market and deal with their properties.

There is speculation that MEES will rise again in 2022, making ‘C’ or ‘D’ the new minimum requirement. When considering any works to upgrade a property to comply with the MEES Regulations for April 2020, landlords should also bear in bind the potential future impact of the regulations.

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