Current position
The MEES were introduced a few years ago by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (the “Regulations”). As many landlords will recall, since 1 April 2018 it has been illegal for landlords of buildings within the scope of the Regulations (whether domestic or non-domestic) to grant or renew existing tenancies if the building has less than the prescribed minimum energy performance certificate of E.
Important upcoming dates for landlords
From 1 April 2020, landlords of domestic privately rented properties which are required to have an EPC will be prohibited from continuing to let out properties if the property has less than the prescribed minimum energy performance certificate of E. Therefore from 1 April 2020 the prescribed minimum will apply to all domestic privately rented properties, regardless of the start date of the tenancy.
The same applies from 1 April 2023 for landlords of non-domestic properties.
When does a landlord need to act?
If your tenancy started before 1 April 2018 and runs until at least 1 April 2020 (for domestic privately rented properties) or 1 April 2023 (for non-domestic properties), as a landlord you have until 1 April 2020 or 1 April 2023 (depending on whether your property is domestic or non-domestic) to improve the property rating to E, or register an exemption, if you want to continue to let it.
If your tenancy started before 1 April 2018 but there are plans to enter into a new tenancy or renew the tenancy before 1 April 2020 (for domestic privately rented properties) or 1 April 2023 (for non-domestic properties), as a landlord you need to improve the property rating to E, or register an exemption before entering into the new tenancy or renewing the existing tenancy.
If your tenancy started on or after 1 April 2018, as a landlord you must improve the property’s rating to E immediately or register an exemption.
It is a landlord’s responsibility to ensure their property is up to standard before marketing it. Landlords should therefore be aware of these dates and ensure their properties are brought into compliance well ahead of time to avoid any MEES- related issues with new or existing lettings (see below for penalties following non-compliance).
What are the Private Rented Sector (PRS) exemptions?
The PRS Register is for properties which are legally required to have an EPC, are let on a relevant tenancy type and cannot be improved to meet the minimum standard of E for one of the exemptions listed below:
1. ‘High cost’ exemption: if the costs to achieve an EPC rating of E or above exceeds £3,500 (including VAT) and the landlord can evidence this with three separate quotes, the landlord can apply for an exemption for any cost over the £3,500 cap. Please note that where improvements have been made since 1 October 2017 up until 31 March 2019, these costs can be deducted from the £3,500 cap to determine the value of any further improvements to be made.
This applies to domestic properties only and lasts for five years.
2. ‘7-year payback’ exemption: improvements that could be made but have not been made as they would not pay for themselves through energy saving within seven years, and the landlord can evidence this through three separate quotes.
This applies to non-domestic properties only and lasts for five years.
3. ‘All improvements made’ exemption: if an independent assessor determines that all relevant energy efficiency improvements have been made to the property and the property remains below an E.
This applies to domestic and non-domestic properties and lasts for five years.
4. ‘Wall insulation’ exemption: where the energy efficiency related recommendation is a cavity wall insulation, external wall insulation or internal wall insulation (for external walls) and the landlord has obtained written expert advice that the measure is not appropriate for the property due to its potential negative impact on the fabric or structure of the property.
This applies to domestic and non-domestic properties and lasts for five years.
5. ‘Consent’ exemption: where consent from a third party is refused or where conditions have been attached to the consent with which the landlord cannot reasonably comply.
This applies to domestic and non-domestic properties and lasts for five years.
6. ‘Devaluation’ exemption: where an independent surveyor determines that the relevant energy efficiency improvements that could be made to the property are likely to reduce the market value of the property by more than 5%.
This applies to domestic and non-domestic properties and lasts for five years.
7. ‘New landlord’ exemption: a temporary exemption for any person who has become a landlord suddenly (and the circumstances by which you are considered a ‘new landlord’ are very specific and set out within the Regulations) and as such it would be inappropriate or unreasonable for them to be required to comply with the Regulations immediately.
This applies to domestic and non-domestic properties and lasts for six months.
Where an exemption applies it must be registered by the landlord (or an agent for the landlord) before it can be relied upon.
For more information on the MEES Regulations, including the penalties for non-compliance, you can read our 2017 article here, although note the following:
(a) the changes to the exemptions as set out above;
(b) there is also an additional fine of £5,000 and publication of non-compliance should false or misleading information be provided to the PRS Exemptions Register;
(c) the ‘no cost to the landlord’ exemption has been removed and is no longer available.
Existing properties will be removed from the PRS Exemptions Register after 31 March 2020 and all affected landlords will be contacted at the beginning of April 2020. Landlords will instead be expected to contribute £3,500 (including VAT) per property to raise the energy efficiency rating to E or above.
For any queries on whether you will be affected or when to act please contact Mary Majewska.
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