Changes to Minimum Energy Efficiency Standards explained

- 16th March 2018

New energy efficiency standards come into effect 1st April

From 1st April 2018 landlords and agents will not be able to issue new tenancies for any properties that have an Energy Performance Certificate (EPC) rating of F or G.

The new minimum energy efficiency standards (MEES) cover rental properties in England and Wales and apply to any property that:

Has an existing EPC
Requires an EPC
Is within a larger unit which requires an EPC

There is no changes being made to the provision of a certificate. This is still only triggered when a property is sold or rented. This means that, if the property does not have an existing certificate, you do not need to apply for one until you want to sell or rent the property.

The new law does not affect ongoing tenancies. However, from April 2020 the law will change again, to cover all tenancies. This means that, if you have an existing tenancy agreement that will be in place until after this date, you must ensure the property is complaint by this deadline.

Certain lets, such as bedsits or rooms in houses in multiple occupation (HMOs) do not require their own EPC. However, if the building they are in has a current certificate that does not reach the required E standard, these units cannot be let without improvement work being done.

This extract is taken from Government guidance:

“Please note that there is no obligation to obtain an EPC on a letting of an individual non self-contained unit within a property, such as a bedsit or a room in a house in multiple occupation (HMO). However the property in which the unit is situated may already have its own EPC covering that property as a whole; this could be because the property had been bought within the past ten years, or because it had previously been rented out on a whole-property basis. If a property as a whole has a valid EPC and that EPC shows an energy efficiency rating of F or G, then the owner/landlord will not, from April 2018, be able to issue new tenancies for non-self-contained units within the property until steps are taken to comply with the Regulations.”

Exceptions

If the MEES do apply, then there are still some reasons that for non-compliance:

The improvement works will devalue the property by 5% or more
The landlord cannot get consent to carry out the works either from the tenant, mortgage lender or superior landlord
If the landlord cannot afford to carry out any improvement works
If the relevant improvement works have been carried out but the energy rating remains under a rating of E

These exemptions must be logged with the Public Exemption Register for them to be considered legitimate. If approved, the exemption will be in effect for five years. (See: https://prsregister.beis.gov.uk.) Local Authorities are informed when exemptions are logged.

After this time, the landlord must have rectified the issue, or apply for the exemption again.

Applications for exemptions must be made using a selection of evidence to show why the criteria cannot be met. This can include written reports by independent agencies, such as RICS approved surveyors.

How to comply

EPC reports give advice on what works can be completed in order to attain the best rating. Common works include:

Ensure sure any cavity walls are filled with insulation materials.
Update your boiler to a newer, more energy efficient model
Loft insulation should be installed with a minimum depth of 270mm.

You can need to have your property inspected by an accredited assessor. There are details of how to find one, here: https://www.epcregister.com/searchAssessor.html.

Costs

The law states that changes made to the property should not result in an upfront or net cost to the landlord. (See exemptions, above.)

This means that the law only requires landlords to make changes that will bring their property within acceptable levels to reach an E grade EPC rating.

It is up to each landlord to decide what changes they make to the property, the Government’s concern is that the property’s energy efficiency is improved.

Landlords who need to make any changes would need to access The Green Deal. This was introduced in 2013 to help provide financial assistance to fund necessary improvements.

The deal enables landlords and homeowners to take out loans to pay for energy efficiency and repay the money overtime through their power bill.

The idea being that, as you save on your energy costs through improved energy-efficiency, this money pays back the loan. This is a so-called Pay as You Save (PAS) scheme.

Applications can be made through your local Green Deal Provider. (See: www.gdfc.co.uk.)

Penatlies

Local Authorities are responsible for enforcing MEES and have the authority to issue fines.

“Where the landlord has let a sub-standard property in breach of the Regulations (see section 1.2) and has been in breach for less than three months at the time the penalty notice is served, the enforcement authority may impose a financial penalty of up to £5,000, or of up to 10% of the rateable value of the property (whichever is greater), subject to a maximum financial penalty of £50,000.”

“Where the landlord has let a sub-standard property unlawfully (see section 1.2) and has been in breach for three months or more at the time the penalty notice is served, the enforcement authority may impose a financial penalty of the greater of up to £10,000 or 20% of the rateable value of the property (whichever is greater), up to a maximum of
£150,000. The enforcement authority may also impose the publication penalty.”

Local Authorities can levy penalties for noncompliance with new MEES regulations.

Purple Frog’s maintenance team has helped clients identify properties that won’t comply and offered advice and services to bring them up to spec. If you have questions about your properties, please speak to your account manager.

If you are not a current Purple Frog client, please see www.purplefrogproperty.com/landlords/for details of how we can help you manage your student properties.