Understanding the Minimum Energy Efficiency Standards
Over the coming years, England, Scotland and Wales are all due to introduce new requirements setting tougher energy targets for both new and existing rental properties. These are contained in the Minimum Energy Efficiency Standards (MEES) also known as the Private Rental Standards (PRS).
It is already a requirement for all rental domestic and most non-domestic properties in England and Wales to achieve a minimum Energy Performance Certificate (EPC) rating of E (subject to certain exemptions). However, from 2025, the requirements will begin to get notably tougher. In addition, new Performance Based Ratings are set to be introduced for certain non-domestic buildings. These changes mean that the energy performance of many buildings will need to be significantly improved. The most effective changes will need to be determined on a building-by-building basis, however, one simple approach can be to upgrade the insulation used on pipe and ductwork.
How do MEES work?
In England and Wales, all domestic rental properties which are subject to EPCs must achieve a rating of E or better unless the landlord has registered a valid exemption. Currently, non-domestic properties which require an EPC must also achieve a rating of E or better when their lease is renewed. From 1 April 2023, the regulations are tightening and it will become unlawful for a landlord to “continue to let” a sub-standard property, unless they have made all possible cost-effective energy efficiency improvements prescribed by MEES, or one of the exemptions applies – i.e. both new leases and existing ones will come into scope.
What are EPCs?
Energy Performance Certificates, or EPCs, are essentially a report card stating how energy efficient a building is and how much carbon emissions it produces). An energy assessor carries out a review of the property looking at aspects such as whether the building fabric and services are insulated and the efficiency of the heating and lighting systems used. They then input this into software to generate a score for the property (e.g. SAP or RDSAP for domestic, or SBEM for Non-domestic). From this, the property is then graded from an A (best) to G (worst) for ‘Energy Efficiency Rating’ and for ‘Environmental Impact’. The EPC certificate is valid for 10 years and will outline a series of recommendations on how the energy efficiency and carbon emissions of the property can be improved.
What are the penalties for non-compliance with MEES?
The penalties for non-compliance with MEES can be substantial. Breaches which last over 3 months can lead to fines of £5,000 for domestic properties and fines of up to £150,000 for non-domestic properties.
What are valid exemptions?
In certain cases, it is possible for landlords to apply for their property to be exempted from MEES. These exemptions must be lodged on a public register and currently apply where:
• the cost of the cheapest improvement is more than £3,500 (domestic properties only)
• the measure will not achieve payback on the cost of purchasing and installing within 7 years (non-domestic properties only);
• all relevant energy efficiency improvements for the property have been made but it still doesn’t achieve an EPC of E; or
• specific third-party consent cannot be achieved for the measures (e.g. planning permission for external wall insulation from the local planning authority).
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