As from 1 April 2020, landlords cannot let, or continue to let, domestic, private rented properties (which includes Assured Tenancies and Rent Act Tenancies) where there is a valid EPC with a rating of F or G. These properties are categorised as “sub-standard” under the Minimum Energy Efficiency Regulations (MEES).
If such a property does not currently have a valid EPC, landlords should consider when an EPC is now required.
Which properties are exempt
There are various exemptions from the MEES regime, but these are very limited and are only temporary. Sometimes, the exemption will simply allow the landlord a period of time to make the improvements to bring the property up the required standard, or time to register another valid exemption (see below).
Here is a summary of the main exemptions – please take advice on the details, if you are considering using them:
- Devaluation: if a landlord can prove that undertaking the relevant energy efficiency improvements would reduce the market value of the property by more than 5%.
- High cost: if a landlord can prove that the cost of buying and installing the cheapest recommended improvement is more than £3,500.
- New landlord: in specified circumstances or, from 1 April 2020, if someone becomes a landlord e.g. buys an interest in a sub-standard property that was already let on an existing tenancy.
- Third party consent: if a landlord needs the consent of a third party to do the improvement works, but cannot obtain such consent.
- Wall Insulation Exemption: where certain recommended wall insulation systems cannot or should not be installed even though they do not exceed £3,500
Any exemption must be registered on the Private Rented Sector Exemptions Register, together with supporting evidence.
The sanctions for non-compliance
There is good news for tenants: even if a residential property let is sub-standard, any tenancy for that property will still be valid on or after 1 April 2020.
However, the consequences of non-compliance for landlords are serious and unwanted: they could face enforcement action by their local authority, financial sanctions and negative publicity.
What about commercial property?
Landlords of commercial property have more time to prepare: the prohibition on continuing to let sub-standard commercial property does not come into force until 1 April 2023.
Our Law-Now explaining the concept of MEES: https://www.cms-lawnow.com/ealerts/2017/06/real-estate-quarter-day-4?cc_lang=en and our Law-Now on the position pre-1 April 2018: https://www.cms-lawnow.com/ealerts/2018/03/mees-new-rules-come-into-force-on-1-april-2018?cc_lang=en
This article applies in England and Wales only.