Minimum Energy Efficiency Standards

New Minimum Energy Efficiency Standards (MEES) are due to be introduced in April 2018 for commercial buildings. Commercial buildings are already required to have an energy efficiency rating from A (best) to G (worst); from next Spring, the owners of the most inefficient properties will be penalised.

Minimum Energy Efficiency Standards April 2018

From 1st April 2018 onwards, landlords of buildings with an EPC rating lower than an ‘E’ will not be allowed to renew existing tenancies or grant new tenancies. From 1st April 2013, landlords will not be allowed to continue letting these properties unless their EPC rating increases to above the minimum standards.

There are a few exemptions, which we will explain later in the blog.

Why are MEES being introduced?

The UK’s housing stock is some of the least energy efficient in Europe. While modern building regulations stipulate energy saving measures such as high levels of insulation, many of our older buildings are very draughty, or have ancient heating systems which are no longer up to the job. The UK is under pressure to help in the fight against global warming, and the less heating wasted in the home, the fewer carbon emissions produced from generating it. More efficient homes should also reduce the number of people living in energy poverty – an increasing problem in the UK.

Properties exempt from MEES

  • Buildings which are not required to have an EPC, i.e. holiday lets.
  • Tenancies of fewer than 6 months (with no right of renewal)
  • Tenancies of more than 99 years.

There are a few more cases in which a landlord can continue to let a property rated less than an ‘E’ without being penalised:

  • Devaluation: An independent surveyor concludes that the required energy efficiency improvements are likely to reduce the market value of the property by more than 5%.
  • Third Party Consent: Consent from persons such as a tenant, a superior landlord or planning authorities has been refused.
  • The ‘Golden Rule’: where an independent assessor determines that all relevant energy efficiency improvements have been made to the property or that improvements that could be made would not pay for themselves through energy savings within seven years. This includes expensive works such as double glazing.

What are the fines for not complying with MEES?

Local Weights and Measures Authorities (LWMAs) have powers to impose civil penalties set depending on the value of the property. Landlords renting out a property in breach of the regulations will be liable to pay:

If in breach for fewer than three months:

10% of the property’s rateable value (minimum £5,000/maximum £50,000)

If in breach for more than three months: 

20% of the property’s rateable value (minimum £10,000/maximum £150,000)

If a landlord is fined, it does not mean the tenants have to leave the property.

How will MEES affect landlords?

Apart from the obvious financial impacts of fines and loss of income through tenancies being banned, the statutory obligations of non-compliant landlords could be affected.

Tenants subletting could count as a new tenancy, against the wishes of the landlord if they want to hold off on making improvements for as long as possible.

The landlord’s right to enter may not extend to extended access for installing energy efficiency measures.

What are the benefits of MEES?

For landlords: Rental and asset value normally increases as a result of energy efficiency improvements.

For tenants: Reduced utility bills.

For the planet: Lower carbon emissions leading to global warming!

Will MEES definitely be introduced?

The government has not yet announced any intention of cancelling the introduction of Minimum Energy Efficiency Standards in April 2018, but there have been doubts raised over whether it will happen. The property industry as a whole has opposed the changes, and Brexit could give the government the chance to quietly scrap the plans if it so chooses. The UK has been subject to increasingly strict EU regulations targeting carbon emissions in recent years, and it may be able to sidestep these once it is no longer under EU control.

It’s a controversial subject, as MEES will certainly cost landlords. However, we think there is something to be said for an initiative that could vastly reduce our environmental impact, while improving living standards and lowering bills for private tenants!

Official government guidelines here.

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