The minimum energy efficiency standards (MEES) was first introduced in March 2015 by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. The MEES Regulations came from the Energy Act 2011. Since then, as of April 2018, before a property can be let, it must meet a minimum energy efficiency rating of E unless the property is exempt.
How does it impact landlords?
Under current legislation, landlords of residential properties are required to have an energy efficiency rating of E or above before they are relet. If they fall below the standard, they must be brought up to standard provided the landlord suffers no material losses as a result of the works. Through the use of Green Deal financing and other grants available, the government believes there is little excuse for landlords to not comply with the new regulations. The original Green Deal finance provided by the government, an innovative finance solution where the landlord can borrow money to carry out specified energy efficiency improvement works was withdrawn in 2015. There are still some Green Deal finance providers but there are limited options available.
The government are consulting on whether to make landlords contribute to the cost of improving the energy efficiency of their properties (capped at £2’500 per property) and this is on the basis that improving the energy efficiency of their properties will likely increase their property’s value.
How will MEES impact me as a landlord?
New MEES legislation removes the ‘no cost to the landlord’ clause and replaces it with the above mentioned £2’500 per property (which can itself be financed by non-repayable grants). Where a landlord has paid their £2’500 contribution and the property is still below an E rating or where a property cannot be altered, such as in the case of listed buildings, the landlord will have to apply for an exemption. Exemptions from Minimum Energy Efficiency Standards last for five years and, at the end of the five-year period, the exemption expires and landlords will have to contribute the same £2’500 (unless again, if the property is listed this doesn’t apply though the exemption still expires at the end of the five year period) before applying for another exemption.
Why is the cap?
The government expects that, from the measures imposed above, approximately 30% of below-standard properties will be improved to an energy efficiency rating of E or above. This translates into around 85’000 properties. The government also says the average cost of works to bring a sub-standard property up to an E rating or above. They also say that if the cap was raised to £5’000 per property, it would mean 42% of properties would be improved to E, equating to 120’000 properties.