Minimum Energy Efficiency Standards (MEES)
What are the Minimum Energy Efficiency Standards?
From 1st April 2018, under new legislation introduced for England and Wales, private domestic and non-domestic landlords either letting or renewing a lease must ensure that their properties achieve a minimum of an “E” EPC (Energy Performance Certificate) rating, unless certain exemptions apply. Any “F” or “G” rated properties will fail the new criteria. Poor performing properties will be phased out.
The Non-Domestic Regulations
- From 1st April 2018, a landlord must bring a sub-standard building (“F” or “G” rated) up to a minimum of an “E” rating before a new lease can be issued (includes some lease renewals).
- By 1st April 2023, existing property leases currently rated an “F” or “G” must be brought up to the minimum “E” rating or shown to be exempt.
- Leases of a fixed length under 6 months or 99 years or longer are exempt.
- There are some exemptions to the new rules, for example, a landlord is unable to obtain a consent to carry out the required works to improve the property; this must though be renewed every 5 years.
- Only energy efficiency measures specified in the regulations must be carried out and only if they pass a seven year payback test.
- A register is being set up listing non compliant properties highlighting any exemptions.
- If all “relevant improvements” are carried out, a property will comply but must register and compliance will only last 5 years.
- Fines will range from £5,000 to £150,000 for non compliance.
So, what does this really mean?
In essence, if a property is not deemed to be energy efficient to a certain standard then a landlord cannot rent a property. Energy efficiency improvements will need to be carried out to bring it up to an acceptable standard so that it can be. Estimates are that 20% - 25% of building stock will be subject to MEES regulations i.e., will require energy efficiency improvements.
SBEM (or similar models) have become significantly more stringent in calculations being applied to energy efficiency since EPC’s were introduced in 1998. Arbnco carried out extensive analysis of poorer rated building stock and highlighted that “24% of all buildings achieved lower ratings on re-simulation”; in other words a significant proportion of poorly performing buildings are likely to now be even worse. “E” or even “D” rated buildings may now be an “F” or a “G”. Landlords must be very active in improving these building’s performance should they wish to rent them going forward.
Coral Energy is well positioned to help you in reviewing your portfolio.
Analysis of your property can be carried out to determine its current rating. If the rating needs to be improved, we can establish an optimum route to achieving the minimum “E” rating or even better. We will provide cost analysis covering building materials and equipment and payback periods as appropriate.