Apart from being April Fools’ Day, 1 April 2020 will also be the day that under the Minimum Energy Efficiency Standards Regulations (“MEES”), it will become unlawful to continue to let a residential property with an Energy Performance Certificate (“EPC”) rating of F or G, regardless of when the tenancy was granted, unless an exemption has been registered in the PRS Exemptions Register. Are you ready?
MEES were brought into force by The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and seek to impose minimum energy efficiency standards for properties. This is done by reference to the EPC rating of the property.
MEES take effect in two stages. They apply to both domestic and non-domestic properties but we are focusing on residential properties in this article. Unless an exemption applies and is registered:
- From 1 April 2018, all properties caught by MEES had to be improved to an EPC rating of E or above before they could lawfully be let to tenants.
- From 1 April 2020 where a lease is already in place, a landlord must not continue to let a property with an EPC that has a rating lower than E. It should be noted that this is a full 3 years earlier than it is for commercial properties.
Are you affected?
MEES apply to two main categories of residential lease:
- Assured tenancies: this category includes assured shorthold tenancies which are the most common form of tenancy used by landlords of privately rented accommodation.
- Regulated tenancies: various forms of regulated tenancy are included, for example Rent Act protected tenancies and some agricultural tenancies.
In contrast to the position for commercial leases, there is no upper or lower limit on the length of term of a tenancy that can be caught by MEES.
What happens if you are caught?
You will need to carry out improvement works to your property and/or register an exemption. Exemptions will generally last a maximum of 5 years. However you should be aware that any exemption registered between 1 October 2017 and 31 March 2019 based upon the landlord’s inability to carry out relevant improvements because no third party funding for the works was available, will terminate early on 31 March 2020. This is because MEES were amended with effect from 31 March 2019, and will now generally require landlords to spend up to £3,500 per property to improve their F or G rating before an exemption on this ground can be registered. Government guidance indicates that landlords in this position will be contacted personally via the PRS Exemptions Register to alert them to the adjusted exemption length.
More detailed information on the various exemptions available can be found in our Information Sheet – click here https://www.ts-p.co.uk/publications/mees-overview-of-issues-for-residential-leases/download.
What do you need to do now?
If you have a let residential property that has a rating of F or G then you need to double check you have complied with MEES. Even if an exemption under MEES applies, it needs to be registered in the PRS Exemptions Register to be valid.
Government guidance on how to register an exemption can be found here.
You should also be aware that MEES for residential properties are likely to be reviewed by the Government in the coming months given the pressure to meet climate change targets; commercial properties are already the subject of review. We do not yet know what the proposals will be for residential properties but the Government’s proposals for commercial properties are to increase the required EPC rating from E to B by 2030. We assume therefore that something similar may be proposed for residential properties. Many more residential property owners will therefore be faced with carrying out energy efficiency improvements and/or registering an exemption if these changes are made.