MEES set to shake up energy efficiency for the private rented sector

As of April 1st 2016, The Minimum Energy Efficiency Standards (MEES) for the residential private rented sector came into force as part of The Energy Efficiency Regulations 2015. This means that landlords with properties to let which have an Energy Performance Certificate (EPC) rating of less than “E” must carry out works to improve the EPC rating, or face penalties of up to £4,000.
MEES regulations also make a landlord’s unreasonable refusal of consent to a tenant’s requests to make prescribed energy efficiency improvements to a property unlawful.
To counterbalance this somewhat, the tenant is held responsible for paying for any energy efficiency improvements carried out so that no upfront costs fall on the landlord unless they have agreed to contribute.
Tenants now also have the right to request energy efficiency improvements for a property, even if the property does not have an EPC rating. However, there are some instances in which a landlord can refuse permission for energy efficiency improvements to be made to a property, including:

• Another tenant made a request within the last 6 months, which the landlord complied with

• The requested improvements are wholly or substantially the same as improvements the landlord proposed within the preceding six months, but was refused or not responded to by the tenant.

Further to these two examples, a landlord can proffer a counter proposal by putting forward alternative energy efficiency measures. Should this happen, the tenant must consent to the works detailed in the counter proposal before they can be carried out.

Is your rental property portfolio affected by MEES?

The Minimum Energy Efficiency Standards apply to all residential properties required to have an EPC and to all tenancies let under Assured Tenancies, Assured Shorthold Tenancies and Rent Act Tenancies. Despite this, lettings can still go ahead for properties which fall under the following four exemptions:

• The property does not require an EPC

• Properties where all possible cost-effective improvements have been carried out, but the property remains below an “E” rated EPC. Cost-effective improvements are those which have been carried out with a Green Deal

• Where third party consent for energy efficiency improvements, such as consent from a lender, freeholder or sitting tenant, was denied or were provided with unreasonable conditions

• If energy efficiency improvement works would reduce the market value of the property by more than 5%, as evidenced by a qualified independent energy efficiency surveyor

These exemptions last for up to 5 years and must be pre-registered on a central register.

EPC Ratings Below “E”? Here’s our advice

If you are a landlord with a residential property portfolio which contains properties with an “F” or “G” EPC rating, our advice is to review the most recent EPC for the properties in question, consider which energy efficiency improvements are advised on the EPC and then carry out these improvements as quickly as possible.
Furthermore, once the work has been carried out on a previously low-rated property, the EPC should be renewed to reflect any improvements in rating. This should be done once work is completed, instead of at the end of the standard EPC 10-year renewable period.
Even if your properties are all rated “E” or above for EPC, over time the requirements of MEES are likely to rise above the current minimum requirement EPC rating of “E”. To prepare for this, we suggest that landlords with properties rated as “E” look as what can be done to improve their EPC rating to “D” or higher.
While this can be costly for those managing large rented residential property portfolios, investing now will save you both time and money in the future as the criteria for compliance become stricter.
Further measures come into effect in 2018, when it becomes unlawful to grant new tenancies for properties with an EPC rating of less than “E”, and in 2020 when this requirement will apply to all new and existing residential tenancies.
To find out more about how to ensure your residential property portfolio reaches the demands of MEES, or to discuss how our team can help you raise energy efficiency across your entire portfolio of residential properties, contact us today.