Minimum Energy Efficiency Regulations – What You Need to Know

March 8, 2023
Emma Peliza

Senior Associate

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Whilst the Minimum Energy Efficiency Regulations (“MEES”) are not new, they are important if you’re buying a commercial or a residential property which you are intending to let out, particularly in light of the pending 1 April trigger date. Here is an overview of what you need to know:

The MEES Regulations apply to domestic private rented property (which is some but not all residential property) and non-domestic private  rented property (excluding property let on a 99 year lease or for a term of 6 months or less) in England and Wales. The MEES Regulations set an energy performance standard below which the property will be deemed to be ‘sub-standard’. ‘Sub-standard’ properties are currently those with an energy performance rating (given by the Energy Performance Certificate) of an ‘F’ or a ‘G’. This means that properties with an EPC rating of ‘E’ or above, do not currently fall within the MEES Regulations.

Where a property is ‘sub-standard’, a landlord may not be able to:

  • Grant a new tenancy or extend or renew an existing tenancy of a private rented property – this applies to both domestic and non-domestic properties
  • Continue to let a domestic property on or after 1 April 2020; and
  • Continue to let a non-domestic property on or after 1 April 2023.

So what can a landlord do if it has a ‘sub-standard’ property?

A landlord faced with a ‘sub-standard’ property will either need to:

  • Carry out energy improvement works so that the property is no longer ‘sub-standard’; or
  • Claim one of the legitimate reasons for not doing such works and register this reason on the PRS Exemptions Register.

The exemptions include (but are not limited to) situations where:

  • The tenant has refused the landlord entry into the property in order to carry out the energy improvement works;
  • The landlord has obtained a valuation report which states that the energy improvement works would decrease the valuation of the property by more than 5%;
  • The landlord has spent £3,500 (domestic properties) on energy improvement works and the property remains ‘sub-standard’, or the landlord will not recover the cost of doing the works within a seven year period (non-domestic properties).

Can a landlord be made to carry out the energy improvement works?

The MEES Regulations do not impose a positive obligation on a landlord to carry out any energy improvement works, but if a landlord grants a new lease of a ‘sub-standard’ property or (after the dates set out above), continues an existing lease, the landlord will be at risk of enforcement action being taken. Enforcement action includes financial penalties and possible damage to reputation through details of the breach being entered on to the PRS Exemption Register.

It is important to note that any lease granted in contravention of the MEES Regulations will still be valid and both landlord and tenant will still be required to comply with their respective obligations within that lease.

Is the definition of ‘sub-standard’ likely to change in the future?

The short answer to this is ‘yes – it is’. The government has stated its intention to review the MEES Regulations. It is expected that in the near future, the minimum energy efficiency rating may be increased to a ‘D’ or a ‘C’. No indication has been given as to when this is likely to take effect (or even that it definitely will take effect). So, watch this space if you have an existing property with an EPC rating of ‘E’ or if you’re in the process of acquiring one.

There are ways in which leases (particularly commercial leases) can be drafted so as to limit either the landlord or the tenant’s potential liability. If you’re a landlord or a tenant and would like advice on this, please do get in touch.

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