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Landlords urged to prepare for new MEES regulations in April

Landlords of the draughtiest homes in England and Wales will be required to upgrade their properties ahead of new rules requiring the installation of energy efficiency measures.

Since April 2018, new rules have been in place across England and Wales, setting out minimum energy efficiency standards (MEES).

These regulations made it unlawful for landlords to grant a new lease for properties that have an energy performance certificate (EPC) rating below E, from 1 April 2018, unless the property is registered as an exemption.

While April 2018 heralded an initial change in the rules regarding energy efficiency standards, the bigger picture will see regulations that affect all rental properties, irrespective of the length of tenancy, in April 2020, when it will become unlawful to rent any property that has an existing or continuing tenancy that fails to meet the minimum required energy rating.

What’s more, the government is considering raising this target in another couple of years, at which point ‘D’ is expected to be the minimum EPC rating, so it is worth getting your properties up to scratch now to prevent even more work later.

To help landlords understand the rule changes, Fladgate, a City law firm, has shared some information below to allow them to understand what precautionary measures they should take and the consequences of not complying with MEES.

Do I benefit from an exemption?

If your property is caught by the EPC regime, you must comply with the MEES Regulations, unless you can rely on one of a few exemptions available to landlords, including but not limited to:

1.       Exemption due to devaluation – a temporary exemption of 5 years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of the property by more than 5%;

2.       Exemption for new landlords – if a person becomes a landlord recently or suddenly in specified circumstances under the MEES Regulations, a temporary exemption of six months will apply; and/or

3.       Third party consent – if a landlord cannot obtain necessary third party consents to improve the EPC rating of the property (including but not limited to lender consent, superior landlord consent and/or tenant consent), then a landlord may let a “sub-standard” property. 

A landlord wishing to rely upon an exemption must register an exemption on the online Private Rented Sector Exemptions Register. Local authorities give and keep these fines and so are incentivised to enforce the legislation. 

What if I don’t comply with the MEES Regulations?

If a landlord fails to comply with the MEES Regulations, there are financial penalties, which vary depending upon the length of the breach. 

A landlord renting out a “non-compliant” property (less than three months in breach) may be fined up to either £5,000 or 10% of a rateable value up to a maximum of £50,000, whichever is greater. 

A landlord renting out a “non-compliant” property (three months or more in breach) may be fined up to either £10,000 or 20% of the rateable value up to a maximum of £150,000, whichever is greater.

There is also a fine of up to £5,000 for providing false or misleading information, or failing to comply with a compliance notice. 

What should I do? 

The tightening of the MEES Regulations imposes further onerous obligations on landlords operating within the private rented sector.  

If you have a property with an EPC rating of F or G then unless one of the exemptions referred to above applies, you should begin preparing now for the extension of the regulations to existing tenancies to take effect on 1st April 2020. 

As the deadline fast approaches, landlords would be well advised to consider the following, in order to protect their assets:

1.       Review your property or property portfolios to identify whether or not properties are compliant;

2.       Consider the cost and extent of any works required;

3.       Consider access to the properties (lease terms permitting) to carry out works required to bring the properties up to the minimum ‘E’ rating; and

4.       Consider whether any exemptions may be relied upon. 

Failure to do so will impact upon landlords’ abilities to market and deal with their properties. 

There is speculation that MEES will rise again in 2022, making ‘C’ or ‘D’ the new minimum requirement. When considering any works to upgrade a property to comply with the MEES Regulations for April 2020, landlords should also bear in bind the potential future impact of the regulations. 

Poll: Are you prepared for new MEES regulations in April?

PLACE YOUR VOTE BELOW

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    I think the financial penalties above apply to commercial property. For residential property, the total fine for non-compliance is capped at £5000.

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    Tenants will all have to refuse consent, otherwise thousands of properties will simply be removed from the rental market as they will be uneconomical to upgrade, especially if they make C the minimum allowable rating. In any case, few tenants in situ will be happy to have major disruptive work carried on around them when they already have enough to deal with in everyday life.

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    If landlords cannot bring the EPC rating up to an E rating within a £3,500 spend then they are able to apply for a "high cost exemption". This should be achievable in most cases, if not then sell the property. Nobody has to be a landlord.

     
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    • 09 January 2020 18:20 PM

    Let’s keep it coming loads of rental tax all sort of it, many rules an regulations, for as long the rents sky rockets and triple ASAP or I am out of this brexiteer nonsense country businesses

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    • 09 January 2020 21:42 PM

    MEES regulations are EU inspired.
    Perhaps once the UK has left the EU these stupid regulations can be abandoned by the UK.
    Any fool tenant can work out what the energy efficiency of a property is.
    Those that cost more might not let out for as much rent or at all.
    The tenant is the customer and they will choose what they want.
    Let the customer decide what properties they wish to rent.
    Poorly insulated properties might not rent and LL will be motivated to improve their offer by investing further in their rental stock.
    Or they might choose not to.
    Their CHOICE!

     
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    • 09 January 2020 21:34 PM

    I said over 6 years ago that unless LL can improve a property to C Standard then the LL should sell.
    Few LL are even aware of MEES.
    Inevitably hundreds of thousands of tenants will be made homeless especially up North where most of the low quality rental stock exists.
    Mostly terraced houses.
    Of course a great chance for aspirant homebuyers with lots of motivated LL sellers with what are now dud letting properties.
    This MEES thing as been known about for years.
    Yet it seems many LL are unaware of the requirements.
    That is just tough for LL but of course the real victims through no fault of their own will be the removed tenants.
    Perhaps LL could sell these dud properties to the Council as social housing is NOT subject to MEES regulations.

    But of course the overall effect will be an ever decreasing stock of rental properties.
    How this this assists tenants beats me!!

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    Why again is it only Landlords this applies to ?, what about the other millions of properties that are not Let and by far greater numbers of Houses & Flats, are they not any problem for the Environment.
    This is just like the HMO unfair Licensing schemes that only applies to some people, if related usually milking the benefit system, sometimes any number to the room, applications now on line no problem for them 75% now apply by their phone internet, so no need to leave the bedroom, (good system) not.

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    • 10 January 2020 13:42 PM

    It would seem that even a homeowner with more than 2 lodgers but less than 4 will need to apply for planning permission even though not subject to Mandatory HMO Licensing.
    Absolutely bonkers.
    Though I can't see many live-in LL bothering with such stupid Council requirements.
    Councils have no easy way to ascertain how many lodgers a LL has.
    Apparently the Scottish Govt intends to introduce licensing along with Council Tax increases for those LL letting on a AirBnB basis etc and even lodger LL!!!!!!???
    What happens in Scotland inevitably is taken up in England.
    I'd love to know how Councils believe they can find out how many lodgers a homeowner has!!!
    So it seems that the PTB want to regulate and penalise lodger LL.
    It is already a devil of a job to persuade homeowners to take in lodgers.
    This will deter many homeowners from taking in lodgers.
    How can that be good for utilisation of the millions of empty rooms in people's homes

     
  • Matthew Payne

    These particular measures (MEES) are driven by the Kyoto protocol on climate change, however, if anyone is wondering why the government is focussed on making LLs as uncomfortable as possible, here is why. 1.5 million landlords in the PRS are difficult to manage, diffcult to track, many they believe are non compliant and avoiding tax. At the same time many institutional landlords are getting heavily involved in the BTR sector at the request of HMG, but in return they want the competition from the PRS reduced. This suits HMG for the reasons above. 15 big institutional landlords on speedial are easier to manage than 1.5million, most of whom are unknown. Ergo they are turning the screw to make private LLs sell up, it will turn tighter yet. Solves another problem of the "housing crisis". The market floods with former BTL properties. Prices will come down and there will be lots of availability and choice for people trying to get on the housing ladder. Win Win Win for HMG. Less headache, more tax, housing crisis aleviated.

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