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MEES Regulations - Impending Deadline 1st April 2020

The 1 April 2020 will mark a change in the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES Regulations). This change will have a direct effect on landlords of residential properties with potential financial penalties and subsequent reputational damage.

We will consider the changes for residential landlords below while keeping one eye on the changes forthcoming for landlords of commercial properties.

The position as it stands

On 1 April 2018 the law changed and new rules set out the criteria for the minimum energy efficiency standards on certain residential properties. A landlord was forbidden from granting a new lease if the EPC rating dropped below an E rating (ratings are A (high)- F (low)). This applied to all residential properties unless registered as an exemption - this includes certain types of properties, certain types of landlords and specific types of tenancy.

The change coming on 1 April 2020

From this date the MEES regulations will affect all rental properties irrespective of the length of tenancy. It will be unlawful to rent any property with a tenancy already in place (lease granted on or before 1 April 2018) or a continuing tenancy that does not meet the minimum E rating.

Landlords of commercial property will have a little longer before the same restriction affects them with the same ban coming in to force on 1 April 2023.

What can Landlords do to bring their property up to post 1 April 2020 standard?

Landlords need to protect their assets by:

• Reviewing your portfolio of properties and identifying any non-compliant properties;
• Taking appropriate action to obtain access to properties (where leased) to undertake works to bring the property up to standard;
• If the property remains below standard after the works (or there are no improvements that can be feasibly made) you may register this information on the PRS Exemptions Register
• Ensure that any exemption is registered on the PRS Exemptions Register

The key exemptions available are:

1. 'High Cost' Exemption - if the cost of making even the cheapest recommended improvement would exceed £3500 (including VAT). Domestic property only.
2. '7 Year Payback' Exemption - if the cost of undertaking the energy performance improvement works exceeds the value of the savings expected to be achieved over a period of 7 years (beginning on the date the installation is completed). Non-domestic property only.
3. 'All Improvements Made' Exemption - where all 'relevant energy efficiency improvements' for the property have been made (or there are none that can be made) and the property remains sub-standard. Domestic and non-domestic property.
4. 'Wall Insulation' Exemption - special provision is that a recommended energy efficiency measure is not considered to be a relevant measure where it is:-
   - Cavity wall insulation, external wall insulation or internal wall insulation (for external walls)
   - Where the landlord has obtained written expert advice indicating that the measure is not appropriate for the property due to its potential negative impact on the fabric or structure of the property.
   - Applies to domestic and non-domestic property.
5. 'Consent' Exemption - Certain energy efficiency improvements may legally require third party consent before being installed. Applies to domestic and non-domestic property.
6. 'Devaluation' Exemption - will apply where the Landlord has obtained a report from an independent surveyor who is an RICS registered surveyor advising that the installation of the specific energy efficiency measures would reduce the market value of the property by more than 5 percent.
7. 'New Landlord' Exemption - temporary exemption where someone has recently become a landlord.

Implications of a breach

Landlords leasing a sub-standard property may face enforcement action by local authorities. The possible outcome of such enforcement action where the property is less than three months in breach could include a fine of up to £5000 or 10% of a rateable value up to a maximum if £50,000, whichever is greater.

If the property is three months or more in breach they may be fined up to £10,000 or 20% of the rateable value up to a maximum of £150,000, whichever is greater.

There is also a fine of up to £5000 for providing false or misleading information or failing to comply with a compliance notice.

There is continued governmental consideration into raising the minimum acceptable EPC standard to 'D', so these regulations are more valid than ever before.

MEES Regulations and COVID-19

The current restrictions in place mean that we should all be staying at home where possible and that travel to work should only take place where absolutely necessary. There is also a shortage of workpeople and materials due to these restrictions. This will of course have an impact upon Landlords' abilities to effectively take action to remedy any non-compliant properties.

In line with the government guidance any work being undertaken that may include attending property should be absolutely essential and should only be completed having undertaken a full risk assessment to include: -

• Assessing the health and safety of all people involved in any work
• Regular washing of hands
• Social distancing
• Shielding and protecting vulnerable people

For more information contact Henry Prescott in our Commercial Property department via email or phone on 0333 207 1163. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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