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MEES, please... are you ready?

April 2018 is the date when the new requirements will first hit…are you ready?

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES Regulations) were introduced to improve energy efficiency in both domestic and non-domestic private rented properties as required by the Energy Act 2011. One of the key requirement is for landlords to ensure their domestic and non-domestic private rented property reaches minimum energy efficiency standards before they can be rented to a tenant. The requirements are coming into effect in two phases, starting in April 2018. The relevant dates for landlords to be aware of are as follows:

Domestic Properties

From April 2018 it will be illegal to rent out a property with an EPC rating below an E, to both a new or existing tenant.

From April 2020 all other privately rented property covered under the regulations must achieve the same rating and landlords must not continue to let a non-compliant property.

For the purposes of the MEES regulations if the landlord is a body registered as a social landlord the property is deemed a not to be a domestic private rented property. This means that social landlords are do not have to comply with these regulations. However, if a tenancy is granted through a subsidiary or group company and not the registered social landlord and the tenancy is granted at open market rent then the regulations will have to be complied with.

Non-Domestic Properties

From April 2018 properties will need to achieve an EPC rating of E before a lease can be granted to either a new or existing tenant.

From April 2023 all other eligible properties covered by the regulations must achieve the same rating, including where a lease is already in place.

These only apply to non-domestic private rented properties with a certain term and are for 6 months (or less) or over 99 years.

There are no exceptions for registered providers in regards to non-domestic properties.

Exemptions

There are exemptions to the regulations, which must be registered on the PRS Exemption Register. The registered opened on 1 October 2017. The exemptions are:

• the landlord has undertaken all relevant energy efficiency improvements but the property remains below an E rating. The improvements carried out must be contained in Green Deal (Qualifying Energy Improvements) Order 2012, been identified as a recommended improvement and also can be wholly financed by funding;
• the landlord requires consent from the tenant(s) and such consent is withheld. This exemption is valid until the current tenancy ends or after 5 years - whichever is sooner;
• the landlord has only recently become the landlord for the property. This is valid for 6 months only;
• third party consent is required for improvements but this consent cannot be obtained. For example, planning permission or consent from mortgage lender;
• improvements to the property would cause a capital devaluation of more than 5%, as confirmed by a suitably qualified independent surveyor. Only the improvements that are expected to such the devaluation would be exempt;
• the landlord has obtained written confirmation that the improvements are not appropriate due to its potential negative impact on the fabric or structure of the property. This is only valid in relation to wall insulation.

These exemptions are personal and will not pass to a new landlord if transferred. The new landlord will have to register the exemption or ensure the property is compliant.

Funding

The government had intended that much of the work that needs to be done to rental properties to ensure that they meet MEEs would be funded by the Green Deal. The Green Deal is a scheme developed under the Energy Act 2011 for improving the energy efficiency of buildings in Great Britain, by removing the up-front cost of such measures. It is based on the principle that energy efficiency improvements to properties pay for themselves through the resulting savings on electricity and gas bills (known as the "golden rule").

Penalties

Penalties include fines of up to £150,000 for non-domestic and £5,000 for domestic private rented properties, as well as publications of non-compliance for providing false information or failing to comply with a compliance notice. These publications can reflect poorly on the reputation of a registered provider.

It would be advisable for registered providers to check their assets register to ensure they are compliant before granting new leases, and also for private landlords to assess their current ratings and any cost effective measures to improve.

Please note these regulations do not apply to licences.

For more information contact Lucy Worrall in our Housing & Regeneration department via email or phone on 01254 222393. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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