Minimum Energy Efficiency Standards – What They Mean
The Energy Efficiency (Private Rented Sector) (England and Wales) Regulations 2015 will make it unlawful from April 2018 to let residential or commercial properties with an Energy Performance Certificate (EPC) rating of ‘F’ or ‘G’ (i.e. the lowest 2 grades of energy efficiency).
The new regulations will have very significant implications for landlords, and for occupiers who wish to assign or sublet space. As a result some properties will become impossible to let unless significant upgrades are undertaken.
As always, these regulations tend to creep up so landlords need to take action now to avoid penalties and protect the value of their asset.
It will undoubtedly follow that lenders will seek to include energy efficiency reports within mortgage surveys and will ask for confirmation of energy rating prior to renewing loans.
Why Has MEES been introduced?
As well as wanting to ensure that the general housing stock is of decent condition, it is about ensuring that housing space is of sufficient quality. The issue of quality is one that differs significantly between categories of property owner, this graph about damp issues demonstrates the differences;
The issues of damp within the privately rented sector are far higher than in other ownership classes.
What Properties Need MEES?
The minimum energy efficiency standards apply to a wide range of properties.
From 1st April 2018, the MEES will be enforced upon the granting of a new lease or renewal of existing leases. Landlords will be required to ensure compliant levels of energy efficiency are in place before any new lease is granted. From 1st April 2023, MEES will be extended to cover all leases, including where a lease is already in place. This means there is no escape from MEES, it is simply a case of doing things now or by 2023.
All non-domestic properties are within the scope of regulations, except for those that do not require an EPC under current regulations, such as listed buildings. MEES does not apply to lettings of 6 months or less (read Airbnb or short term lets), or to lettings of 99 years or more (read as effective purchase).
There is a decision tree as to whether you need to meet MEES specifications or not, this has been published as part of the .gov resources on the new regulations;
Even with the decision tree there are still some questions over where action needs to be taken. Bear in mind that for many properties that landlords have owned for some time that an EPC may never have been undertaken.
A link to the full .gov support material is below. It would be well worth getting ahead of things as landlords with buy to let mortgages falling due over the next few years will likely find MEES as another criteria on the mortgage renewal.
By Dave Farmer
Non Domestic Property MEES Guide
Domestic Property MEES Guide