Most landlords will already be familiar with the Domestic Minimum Energy Efficiency (MEES) Regulations which came into force on 1 April 2018. The MEES Regulations made it illegal for a landlord to grant a tenancy of a residential property which had an Energy Performance Certificate (EPC) rating of F or G. As of the 1st April 2020, the MEES Regulations will apply to all lettings of residential property, including existing tenancies which started before 1st April 2018.
Breaching the Regulations could result in a fine of up to £4,000 (per breach), so it is imperative that landlords know exactly what their obligations are and if there are any exceptions to the rules.
Who do the MEES Regulations apply to?
The majority of rental properties in England and Wales will fall under the MEES Regulations, but there are some exceptions where a landlord may be able to register an exemption on the PRS Exemptions Register. These include:
If a tenant refuses to give approval for improvement works to be undertaken.
If a landlord is unable to obtain consent to carry out works from a third party, despite reasonable efforts.
If the necessary improvement works would devalue the property by more than 5%.
If the necessary improvement works will cost more than £3,500.
What steps do landlords need to be taking?
In order to avoid being in breach of the MEES Regulations, landlords will need to take immediate steps to bring their properties up to standard, unless:
There is a valid reason which enables a landlord to register an exemption on the PRS Exemptions Register; or a landlord has undertaken all possible improvements to the property to try and increase its energy efficiency rating, but the rating still falls below an E. In this case, a landlord will still need to register an exemption on the PRS Exemptions Register.
Improving a property’s EPC rating will not always require significant works to be undertaken. There are a number of small improvements that landlords can make which could make all the difference. These include switching to a smart meter, installing loft insulation and using low energy lightbulbs.
What are the potential costs?
Landlords will understandably be concerned about the potential costs of bringing a property up to standard. Fortunately for landlords, there is a ‘cost cap’ on the amount which they are required to spend on improvements. The ‘cost cap’ is £3,500 per property (including VAT).
If a property’s EPC rating remains below E after all possible measures to improve it have been made up to the ‘cost cap’, a landlord will be able to register an exemption on the PRS Exemptions Register.
Funding for certain improvements may be available to some landlords, so it is certainly worth exploring this further before any works are carried out.
What are the consequences if landlords fail to comply?
Failing to comply with the MEES Regulation could result in a fine of up to £4,000 depending on how long the length of the breach is. Submitting false or misleading information to the PRS Exemptions Register could also result in a fine of up to £1,000.
Furthermore, details of any breaches may be published on the PRS Exemptions Register which is publicly available.
The impending deadline means that landlords need to be taking immediate steps to ensure that all of their properties have a minimum EPC rating of E, or that they have registered an exemption on the PRS Exemptions Register.
By Jessica Slater, real estate litigation solicitor at Joelson.