What do landlords need to know about energy efficiency laws (MEES)?

Since 1 April 2020, private landlords in England and Wales have been unable to legally let a property on an assured tenancy agreement unless it has a minimum rating of ‘E’ on the Energy Performance Certificate – or unless an exemption for the property has been registered.

This is under the Domestic Minimum Energy Efficiency Standard (MEES) Regulations, which were introduced by the Government in April 2018, when it became illegal for any property to be let privately on an assured tenancy agreement or to have a tenancy renewed if it was rated ‘F’ or ‘G’ on the EPC. From April 2020, that was extended to include existing tenancies as well.

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Why were MEES introduced?

The Government recognised that rented properties rated ‘F’ and ‘G’ on the EPC were wasting energy and increasing their energy efficiency would help:

  • Reduce greenhouse gases
  • Reduce energy costs for tenants
  • Improve the overall condition of rented properties
  • Reduce maintenance costs

What are the MEES exemptions?

Landlords can register the following exemptions:

  1. ‘High cost’ exemption – if the cost of making the cheapest recommended improvement required to improve the property’s rating to ‘E’ or above would exceed £3,500 (inc. VAT)
  2. ‘7 Year Payback’ exemption – if the cost of making improvements would be more than the expected savings on energy bills over a period of seven years
  3. All Improvements Made’ exemption – if all possible energy efficiency improvements have already been made (or none can be made) and there is nothing more that can reasonably be done to improve the property’s rating to ‘E’ or above
  4. ‘Wall Insulation’ exemption – if installing wall insulation would negatively impact the structure or fabric of the property
  5. ‘Third-party Consent’ exemption – if improvements need consent from another party (e.g. a tenant, mortgagee or freeholder) and you either can’t get consent or it’s given, but with conditions that you couldn’t reasonably be expected to comply with
  6. ‘Devaluation’ exemption – if making the necessary improvements would reduce the value of the property by five percent or more
  7. ‘New Landlord’ exemption – if you’ve suddenly become a landlord, you can apply for a six-month exemption to give you time to either bring the property up to standard

Registration is made on a self-certification basis and the exemption applies as soon as it’s been registered. That means if you have a valid reason for not bringing a rented property up to a minimum ‘E’ rating on the EPC – i.e. you can prove that one of the exemptions listed above applies – you can legally let the property as soon as you’ve registered the exemption.

You should obtain and hold all reports, quotes, etc. that support your exemption claim, such as a surveyor’s valuation or supplier/contractor quotes.

The exemptions generally last for five years, then either improvements must be made to bring the property up to the minimum standard, or another exemption can be registered.

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What are the penalties for not complying with MEES?

Your local authority can impose a civil penalty of up to £5,000, which may be made up of various separate penalties, including:

  • Where regulations have been breached for three months or more – up to £4,000
  • Where false or misleading information has been entered on the PRS Exemptions Register – up to £1,000
  • Where a landlord has failed to comply with a compliance notice – up to £2,000

In addition to these financial penalties, landlords who do not have a valid EPC may also be unable to serve a Section 21 notice to gain possession at the end of the tenancy. Another potential cost is the loss of rental income for the period the property is legally unlettable.

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The Energy Efficiency (Domestic Private Rented Property (Scotland) Regulations 2020 were due to come into force on 1 April 2020, but were delayed due to the pandemic.

The gov.scot website states: ‘The work on improving energy efficiency in private rented housing will resume once the current COVID-19 crisis comes to an end.’

The planned implementation of energy efficiency regulations would have meant that rented properties in Scotland would have required a minimum EPC rating of ‘E’ for a new tenancy from April 2020. Further minimum requirements were due to be phased in as follows:

  • By 31 March 2022: ‘E’ rating for all tenancies
  • From 1 April 2022: ‘D’ rating for a change in tenancy
  • By 31 March 2025: ‘D’ rating for all tenancies

As it currently stands, therefore, there is no minimum EPC rating required for rented properties in Scotland.

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