Changes to Minimum Energy Efficiency Standard (MEES) for rental properties

Published by: Fiona Fay, Associate Director

As part of the government’s work to try and meet its carbon neutrality goals by the year 2050, there will be some changes to the Minimum Energy Efficiency Standard (MEES) for rental properties.
Currently, having a valid Energy Performance Certificates (EPC’s) is a legal requirement for all properties offered for rental or sale.   EPC’s give an energy performance rating with the most energy efficient properties being awarded an A rating while the least efficient are rated as a G. Under current legislation, legally any rental property must have a minimum rating of E or above.  

However, regulations are soon due to become much more stringent as a new government energy performance bill proposes raising this requirement to a minimum of a C rating.  The new Minimum Energy Performance of Buildings Bill suggests that as from 2025, any properties newly offered to the market must be rated C or above. By 2028, all rental properties will need to meet this standard, i.e. even properties with a Tenant already in occupation will need to be brought up to standard.
A recent survey suggests that 60% of homes in the UK have a rating of D or lower meaning the majority of rental properties will require upgrading in order to comply with new legislation.  EPC’s outline recommendations to improve the rating and these could include reviewing insulation in walls, floors, roofs, windows as well as installing more energy efficient heating systems e.g. boiler replacements.

Currently the cost for EPC improvements is capped at £3500 but this cap is being raised to £10,000.  Landlords of non-compliant properties will need to carry out the suggested changes for improvement at their own cost in order to continue letting the property out after the aforementioned deadlines.  They should keep careful records of all expenses accrued and once they hit the spend cap, they can apply for exemption so no further changes are required.

There are also some other potential exemptions such as:

  • Listed buildings where the changes would alter the property's character or appearance
  • The mortgage lender will not approve the upgrades or changes requiredThe mortgage lender will not approve the upgrades or changes required
  • The work has been carried out and the cost has been accrued but the EPC rating has not yet reached the minimum standard
A compliant EPC must be made available at marketing stage and Tenants must also be provided with a compliant EPC at the start of the tenancy and at various other points during their tenancy such as when a new one is carried out, at tenancy renewal and it’s also recommended at notice stage.  Failure to comply with this legislation not only exposes you to the risks of heavy fines, it could also frustrated any notice you try and serve on your Tenants.  
The government have proposed increasing the penalty for Landlords who do not have a valid EPC from £5,000 to £30,000 from 2025. This is part of the government’s work to try and meet its carbon neutrality goals by the year 2050.

As you can imagine, the energy crisis due to substantial increases in energy prices has meant the energy efficiency of a property is already affecting prospective Tenants and Purchasers transactional decisions with many favouring properties with higher ratings.

In view of this, we would recommend you consider looking into ways of improving your property’s energy rating now, rather than waiting until the new legislation comes into effect.  The ideal time to do this is in between tenancies but in order to do this as effectively as possible and minimise any void period, it is worth investigating the required works and associated costs now so that you can weigh up how feasible this is and put a financial plan in place.

It is worth mentioning that many lenders are offering finance for this purpose.  Our Financial Advisors can offer obligation free advice in this regard.  As an independent broker, they have access to a broad range of lenders so will always shop around for the best deal.  

If you would like any help or advice on any aspects of the above, please do not hesitate to get in touch with Fiona Fay, Associate Director on 01932 212880