The Minimum Energy Efficiency Standards (MEES) were introduced under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. Essentially, the MEES stipulate that a property must attain a minimum energy efficiency level (an EPC rating) of E to be lawfully leased to residential or commercial tenants. Properties with an EPC of F or G are considered ‘substandard’.
Introduced in April 2018, the MEES have been rolled out in several stages: first applying only to new residential and commercial leases (2018); then expanding to cover all existing residential leases in April 2020; and finally, as of April 1, 2023, all existing commercial leases will also need to comply with the legislation and have a minimum EPC rating of E.
This applies whether a new lease has been granted or not – so a landlord not in breach of the law on March 31 could be guilty of renting a substandard property to the same tenant as of April 1. This would be the case even if the lease was originally granted before the legislation came into force.
What are the penalties for non-compliance?
Fines of up to £150,000 can be imposed, with the most severe sanctions reserved for commercial breaches.
- A maximum of £2,000 for breaches lasting less than three months
- A maximum of £4,000 for breaches lasting longer than three months.
- £5,000 or 12.5% of the property’s rateable value (whichever is highest, up to maximum of £50,000) for breaches lasting less than three months
- £10,000 or 20% of the property’s rateable value (whichever is highest, up to a maximum of £150,000) for breaches lasting longer than three months.
There are also some more minor financial penalties for:
- Registering false or misleading information on the exemptions register
- Failing to act on a compliance notice.
Are there any exceptions?
There are some limited exceptions, but landlords must give a reason listed on the exemptions register and have documented proof. Reasons include:
- High cost – the landlord can prove that the cost of making even the cheapest recommended improvement would be in excess of £3,500
- Seven-year payback – the cost of improving the property’s EPC to at least an E exceeds the savings on energy bills the landlord could expect to make within a period of seven years
- All improvements made – the property remains substandard even after the landlord has made every possible energy efficiency improvement
- Wall insulation – the landlord has sought written expert advice stating that installing the recommended insulation systems would not be appropriate for the property
- Consent – some improvements require third-party consent; if this is refused, the landlord might have grounds to register an exemption
- Devaluation – the landlord has written evidence from a RICS chartered surveyor that efficiency improvements would reduce the property’s value by more than 5%
- New landlord – a person has become a landlord suddenly, meaning it wouldn’t be fair for them to have to immediately comply with the regulations – this is a temporary exemption of six months.
What does the future hold?
Landlords renting out properties to domestic and commercial tenants currently need to comply with a comparatively ‘low bar’, with the obligation to raise their EPC rating to E – just two categories up from the lowest rating of G.
However, the government has more ambitious plans, with the minimum EPC for buy-to-let residential properties expected to rise to C by 2028; and commercial buildings expected to rise to B by 2030. To put into context how great an undertaking this will be, 80% of London’s offices do not currently meet this standard, which is set to be imposed in just seven years’ time.
It is highly advisable that landlords start preparing for this eventuality well in advance, to avoid falling foul of MEES regulations.
If you are concerned about the MEES or require any legal advice, get in touch with our Property team on 0344 967 2505, email us at Property@woodfines.co.uk or visit the website.