19/04/2021
Since 2008, it has been a legal requirement that whenever a property is built, sold or rented, an Energy Performance Certificate (“EPC”) is required. An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient). EPCs are valid for 10 years unless they are superseded by a more recent EPC – for instance, a new EPC may have been obtained on completion of alterations to a property. Only limited commercial buildings, such as industrial sites and detached buildings which are less than 50 square metres, are exempt from the EPC regime.
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 introduced new Minimum Energy Efficiency Standards (“MEES”). MEES apply to both residential and commercial private rented property. By 1st April 2023, all rented properties will need to have an EPC rating of E or above. Any properties with ratings of F or G will be sub-standard and landlords could be subject to fines or other enforcement action.
MEES introduced a timetable for landlords to comply with the minimum E rating.
1 April 2018: since 1 April 2018, it has been an offence for a landlord of residential or commercial property to sell or grant a new lease or renew a lease of a property which has a rating of F or G.
1 April 2020: From 1 April 2020, MEES will apply to all privately rented residential property and it will be an offence to continue to let residential property with an EPC rating below E.
1 April 2023: From 1 April 2023, MEES will apply to all privately rented commercial property and it will be an offence to continue to let commercial property with an EPC rating below E.
Landlords of residential property with an EPC rating of F or G need to ensure that the rating is improved to an E or above before 1 April 2020 unless an exemption applies. Landlords of commercial property have an additional 3 years to improve ratings to an E or above, unless granting a new lease or renewing a lease.
Exemptions
Properties may be exempt from MEES if one or more of the following exemptions apply:-
-Relevant improvements: all relevant improvements have been made and the property remains sub-standard -High cost: improvements are not cost-effective -Wall insulation: only relevant improvements are wall insulation and would negatively impact on the fabric or structure of the building -Consent: consent is required by a third party (e.g. superior landlord) to undertake improvements and has been refused -Devaluation: improvements would devalue the property by more than 5%
The exemptions must be applied for and evidence provided. An exemption will last for 5 years, after which the landlord must improve the EPC rating or re-apply for an exemption. If the property is sold, the new landlord will not automatically be exempt.
Penalties
A residential landlord continuing to let property after 1 April 2020 in breach of MEES can be fined up to £5,000 per property.
A commercial landlord granting a new lease or renewing a lease now, or continuing to let after 1 April 2023 may face large fines:-
– Breach for less than 3 months: 10% of rateable value (min. £5,000 / max. £50,000) – Breach for more than 3 months: 20% of rateable value (min. £10,000 / max. £150,000) – Providing false or misleading exemption information: max. £5,000 – Failing to comply with a compliance notice: max. £5,000
Two years sounds like a long time to get organised but if you are a landlord, please don't leave it to the last minute. If your rating is an F or G please ensure that you leave enough time to do the necessary improvement works or get an exemption registered. More often than not it can be as simple as improving the lighting but we all know how busy electricians are and a little bit of forward planning could save you paying over the odds as time ticks down to the April 2023 deadline.
