From 1st April 2018, landlords of domestic and non-domestic private rented properties cannot offer a property to a new or existing tenant if it has an Energy Performance Certificate (EPC) rating below ‘E’. These new Minimum Energy Efficiency Standards (MEES) will apply to all tenancies by 2020.
There are, however some exemptions and exclusions to the regulations:
1. Where the landlord has made all the ‘relevant energy efficiency improvements’ or none can be made and the property remains sub-standard.
2. Where the cost of the recommended measure cannot be wholly financed at no cost to the landlord.
When registering this exemption, the landlord may provide a written explanation as to why funding to cover the improvement could not be obtained.
It is also helpful to submit supporting evidence, such as written advice from a Green Deal Provider stating that funding is unavailable.
3. Where wall insulation systems can’t or shouldn’t be installed in particular properties due to its negative impact on the structure of the property.
The landlord must provide expert advice as evidence that the measure should not be carried out on the property from an independent expert, such as an architect registered on the Register of Architects Accredited in Building Conservation.
4. Where the landlord is unable to acquire consent from a third party despite making ‘reasonable effort’.
There are many instances in which a landlord may need consent from a third party to install a recommended measure. For instance, external wall insulation or solar panels may require consent from mortgage lenders or the local authority planning department.
Please note that the landlord must make other improvements, for which consent will not prove a barrier.
5. Where energy efficiency measures would reduce the market value of the property.
There will be an exemption if the measure decreases the commercial value of a property, or the building it forms a part of, by more than five percent. If this is the case, the landlord must provide a report from an independent surveyor who is on the Royal Institution of Chartered Surveyors (RICS).
The landlord must still install improvements that are not on the report and would not devalue the property.
6. Where the person has recently become a landlord.
In some circumstances, a person may have become a landlord suddenly and therefore it would be unreasonable for the landlord to comply with the MEES regulations immediately.
An example of such circumstances is where ‘the landlord has been a guarantor, or a former tenant, who has exercised the right to obtain an overriding lease of a property under section 19 of the Landlord and Tenant (Covenants) Act 1995 (for the avoidance of doubt, a “guarantor” who exercises this right under the 1995 Act is the guarantor of a former tenant).’
When the person has recently become a landlord, they will be granted a temporary exemption of six months.
All of the above exemptions must be registered on the national PRS Exemptions Register.
For more information, please check the government’s guide for landlords.
