Minimum Energy Efficiency Standard Regulations in the Private Rental Sector

Keeran Jugdoyal
The UK Government has set itself the ambitious legal target to bring down carbon emissions from buildings to "close to zero" by 2050, and it hopes that the upcoming Minimum Energy Efficiency Standard Regulations (MEES) will help achieve this in England and Wales.

The MEES regulations target the least energy efficient rented buildings (both domestic and commercial) and provide the necessary incentive for landlords to improve the performance of their properties. Currently, when the vast majority of buildings are let, they require a valid Energy Performance Certificate (EPC) that provides an energy rating from A to G. An A rating indicates a very energy efficient building, whereas the G rating is reserved for inefficient and poor performing properties. The MEES regulations state that after 1 April 2018 it will not be possible to let out most buildings, or renew the lease on a building with an existing EPC, if it has a rating of F or G. There is an exemption for the small number of buildings which do not require an EPC.

There has traditionally been a lack of motivation from landlords to invest in energy efficiency measures as they bear all the costs, whilst the tenants reap the benefit of lower energy bills. The MEES regulations give landlords a direct incentive to improve the worst performing buildings or miss out on the rental income; a poor rating my affect the property valuation and the ability of secure lending agreements. There will also be large penalties of up to £150,000 for non-compliant properties. Implications to tenants may apply as MEES may have an impact on dilapidations assessments, where they may be responsible for making good any issues that impact on an existing EPC rating.

The MEES regulations give landlords a direct incentive to improve the worst performing buildings or miss out on the rental income...

The EPC rating takes into consideration the level of insulation in a building's external fabric along with the efficiency of any heating, cooling, ventilation and lighting systems and so any measure targeted at improving these elements will impact the overall rating. The use of renewable energy and low carbon technologies such as solar photovoltaic panels also contribute towards improving the rating.

Faithful+Gould can work with landlords of poorly performing buildings to undertake an energy and building fabric assessment that will identify the most cost effective energy saving measures which can be applied across these areas. We can also help to manage the implementation of any refurbishment work required.

If the right conditions are met, a landlord can obtain an exemption from achieving the minimum E rating where they have implemented all the measures identified that have a maximum payback period of seven years and the building still doesn’t meet the minimum rating. This is a really positive step in the Private Rental Sector towards achieving zero carbon emissions.