The rules about Energy Performance Certificates (EPCs) and minimum energy efficiency standards (MEES) for rented dwellings were introduced in 2018 and updated in 2020.
As it stands today, rental properties that are covered by the regulations are required to have an EPC rating of E or above. This means that it is illegal to let out a property that has a rating of F or G. Fines of up to £5,000 can be levied for short term offences. Longer term offenders could be looking at a fine of £10,000 – or even 10–20% of the value of the property.
(A brief aside: in 2022 it was announced that rental properties would need to be rated C and above from 2025, but this was later scrapped. There is currently no legal requirement for rental properties to have an EPC rating of any higher than E).
Of course, these sorts of rules are never completely straightforward. Certain rental properties aren’t covered by the legislation, and even those that are covered could be subject to the long list of possible exemptions.
If you’re advising clients on the legalities of managing rental properties, you’ll need to be certain you know exactly where they stand.
What types of rental property are covered by the regulations?
In order to be subject to the MEES rules for EPCs, the rental property must be let on:
- An assured tenancy
- A regulated tenancy
- A domestic agricultural tenancy
The property must also be legally required to have an EPC, which is usually the case if the property has been:
- Marketed for sale in the past ten years
- Marketed for let in the past ten years
- Modified in the past ten years
Any property for which both these things apply will be subject to the MEES regulations.
This does mean that no action needs to be taken if a property is currently empty and there are no imminent plans to let it.
What are the exemptions?
There are rather a confusingly large number of exceptions to the MEES rules. Initially, they only applied to new or renewed tenancies, not those that were already in place. However, this changed in 2020, and at that point landlords were required to comply with the regulations regardless of how long their tenants had been in place.
Exemptions do apply for rental properties where:
- Each room is being rented out individually as part of an HMO
- The necessary energy efficiency improvements couldn’t be completed for under a cost cap of £3,500 (though any appropriate improvements costing up to this cap should be made)
- The saving from a necessary improvement wouldn’t cover its own cost within seven years
- A relevant expert has stated that insulation isn’t suitable for, or would be detrimental to, the property
- All recommended improvements have been made and the rating remains below an E
- There are no recommended improvements that can be made
- The tenant has refused consent for the landlord to carry out recommended improvements (in which case the landlord will have to try again to carry them out either when the tenant leaves or after five years, whichever is soonest)
- The recommended improvements would devalue the property by more than 5%
- The landlord has only recently taken over the property (this exemption only lasts for a period of 6 months)
What do landlords need to do about this?
Landlords with properties with EPC ratings of E and above don’t need to do anything further.
However, landlords with a rating of F or G will need to take action right away. This is the case whether they are starting a new tenancy or whether they already have tenants in place.
In this case, landlords will either need to take action to improve the property’s EPC rating or, if this isn’t possible, register an exemption. This can be done online at the PRS Register. Evidence will be needed for each exemption; the government guidance on this should make it reasonably clear which documents will need to be provided for this.
If you are in need of more detailed information about the MEES regulations and where your clients might stand, you can view the government guidance on the issue here. Want to have a chat? Get in touch with us here hello@inspiredprogress.co.uk