New regulations affecting residential landlords will come into affect on 1 April, with penalties for breach that could reach up to £5000. Lisa Coubrough, Residential Conveyancing Solicitor explains what this means in practice.
What is the importance of MEES to landlords?
If you rent a residential property in England or Wales then the Energy Efficiency (Private Rented Sector) (England and Wales) Regulations 2015 (MEES) are aimed at you
From 1 April 2018 it will be unlawful to let residential properties with an Energy Performance Certificate (EPC) rating of F or G (the lowest grades of energy efficiency)
- From 1 April 2020 it will be unlawful to continue to let residential properties if the EPC is rated at F or G
If your property has an EPC then it must have the minimum energy performance rating of E if you wish to grant a new tenancy or renew an existing tenancy after 1 April 2018 (unless the landlord registers an exemption, which is described below).
If the rating is below E you will need to carry out improvement works to bring the property up to the minimum rating required, or face heavy financial penalties of up to £5000.
What types of tenancies do MEES apply to?
MEES apply to most types of residential tenancies over six months including Assured Shorthold Tenancies. Note, that houses in multiple occupation are not excluded from the regulations.
MEES do not apply to:
- A property that is not legally required to have an EPC (for example, where it has not been built, sold or let since the introduction of EPCs)
- A tenancy for less than six months, unless that tenancy can be extended
- A lease granted for 99 years, or more
- Owner-occupied properties
- Housing association/social housing
What you should do, sooner rather than later…
As most residential tenancies are for 6 to 12 months, the implications of the regulations are going to need to be looked at as early as possible.
Firstly, you should check the EPC rating for the property at:
If the rating of the property is ‘F’ or ‘G’, then you should consult a surveyor to ascertain what works should be carried out to the property to improve the EPC rating.
Once any necessary works are complete, you should commission a new EPC to confirm the new rating. If your EPC shows a rating of ‘E’, then there is no further action that you need to take.
You have to renew an EPC after ten years, when it expires, if you sell or re-let the property. If the rating has dropped when it is renewed then the above measures will need to take place.
What exemptions are available?
There are a number of exemptions available:
- Where the landlord has carried out the recommended energy improvement works, but the property is still an F or G rating
- Where the improvements required are not cost-effective, i.e. the recommended energy improvements do not pay for themselves in energy savings over a seven year period
- Where the landlord cannot obtain the necessary consents from third parties (such as planning authorities, tenants, superior landlords, lenders) to carry out the works despite reasonable efforts to do so
- The landlord has obtained a report by an independent surveyor that states:
- the improvements will reduce the value of the property by a minimum of 5%
- would have a negative impact on the structure of the property
Exemptions must be registered with the PRS Exemptions Register, which has been available for residential properties since October 2017. Note, there are time constraints – exemptions can only be registered for five years.
What are the financial penalties for failure to comply?
Where a local authority decides to impose a financial penalty they have the discretion to decide on the amount up to a maximum limit:
- If a substandard property has been let for a period of less than three months, in breach of MEES, a financial penalty of up to £2000 may be imposed
- If a substandard property has been let for three months or more, in breach of MEES, a financial penalty of up to £4000 may be imposed
- Where a landlord has registered false or misleading information on the PRS Exemptions Register, a financial penalty of up to £1000 may be imposed
- Where a landlord has failed to comply with a compliance notice, a financial penalty of up to £2000 may be imposed
Penalties can be imposed under multiple paragraphs above and if so, the total penalty must not exceed £5000. Although penalties cannot be imposed under both paragraphs (1) and (2). It is important to note that this maximum amount applies per property.
It is vital that landlords do not ignore requirements under these regulations.
Where any doubt arises as to the obligations or exemptions that apply to a landlord, they should seek legal advice as soon as possible in order to avoid penalties.