Minimum energy efficiency standards are changing. Are you switched on?

New minimum energy efficiency standards (MEES) came into force in England and Wales from 1 April 2018. As a result of the regulations, from 1 April 2018 landlords were required to ensure that any privately-let properties achieved an Energy Performance Certificate (EPC) rating of E or above, unless the property had an approved exemption.

The rules already have applied to new tenancies since 2018, but as of 1 April 2020 they will come into effect for existing tenancies too. Landlords therefore have until 1 April this year (2020) to improve the energy efficiency of all of their properties to an EPC rating of E, or register a valid exemption.

As a landlord it is your responsibility to assess your property to ensure that you are compliant with MEES standards, so if you haven’t already done so you need to act now.

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Why were minimum energy efficiency standards introduced?

The Government Department for Business, Energy and Industrial Strategy states:

“EPC F and G rated properties waste energy. They impose unnecessary cost on tenants and the wider economy, and they contribute to avoidable greenhouse gas emissions. Increasing the energy efficiency of our domestic rental stock can help:

  • Manage the energy costs of tenants, including some of the most vulnerable
  • Improve the condition of properties and help reduce maintenance costs
  • Smooth seasonal peaks in energy demand, and thereby increase our energy security
  • Reduce greenhouse gas emissions at relatively low cost.

The regulations are intended to ensure that those tenants who most need more efficient homes, particularly vulnerable people, are able to enjoy a much better living environment and lower energy bills.”

They also note that a report published in 2016 by Sustainable Homes on social housing found that improving the energy efficiency of rental housing also positively impacted on landlords by reducing rental arrears and voids.

For example, it was found that cold homes, on average each year, had two more weeks of rent arrears when compared to more efficient homes. In addition, as homes become more efficient void periods are also reduced, with 31 per cent fewer voids in band B properties when compared with those of E or F. The standards are therefore mutually beneficial for both landlords and tenants.

Some landlords may seek to pass on the costs of the improvements to tenants by raising the rent. “However, by carrying out the works, landlords are likely to improve the value of their property and enjoy better relationships with tenants – who, in turn, should benefit from energy bill savings,” says Jeremy Leaf, of Jeremy Leaf & Co estate agency in north London.

Read the published government guidance in full here.

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What are the consequences of failure to comply with the minimum energy efficiency standards?

Local authorities will be able to impose civil penalties if a landlord is found to be letting out a property with a sub-standard EPC rating. Most recently, Oxford city council has taken direct powers to enforce MEES regulation with fines of £200 for non-compliance with EPC regulations.

Government guidance states that local authorities may check for different types of compliance including the following:

  • From 1 April 2018, you let your property in breach of the regulations
  • From 1 April 2020, you continue to let your property in breach of the regulations
  • You have registered any false or misleading information on the PRS Exemptions Register

If a local authority confirms that a breach of the regulations has occurred then there are a number of financial penalties that can be imposed on landlords.

Where a landlord has let a sub-standard property for a period of less than three months then the local authority will be able to impose a fine of up to £2,000.

If in breach of the regulations for more than three months then a financial penalty of up to £4,000 could be served. This can also include a publication penalty, where details of a landlord’s breach may be published.

In addition, 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 landlords who are unable to let out a property while it is legally unlettable.

Minimum energy efficiency standards are changing. Are you switched on?

How can I comply with the minimum energy efficiency standards as a landlord?

For many landlords, only small changes to their property may be needed to ensure that they meet standards. A report published by Parity Projects for the UK Green Building Council suggests that the energy efficiency of a property can often be improved for £2,500 or less.

Measures such as improving insulation, attending to window and door seals to eliminate drafts and installing Low-energy LED lighting are all easily implemented ways in which landlords can manage the energy efficiency of their properties.

Some energy companies also offer help to landlords. You can find out more about the new EPC and keeping your property green here.

You can find further information in the Government ‘Domestic landlord guidance’ document here.

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