The Minimum Energy Efficiency Standards (MEES) could be changing. Currently, there is an ongoing Government consultation on improving energy efficiency within the private rental sector.
Since 2008, it has been a requirement for landlords to provide an EPC for any property that is in the social housing, private rental, or commercial sectors. An EPC provides a rating for the energy efficiency of a property, from A to G, with A being the most energy efficient. An EPC lasts for 10 years and also identifies ways in which energy efficiency can be improved, from simple changes such as changing to more energy efficient lightbulbs, to more costly renovations such as installing draught insulation.
What are the changes under the MEES Consultation 2025?
Since 1 April 2016, privately rented premises have been required to have an EPC rating of E or above. An EPC rating of F or G means that a landlord cannot legally let their premises to a tenant unless they have a valid exemption. The Government is proposing to raise the minimum rating from an E to a C. New tenancies would need to meet these criteria by 2028, whilst existing tenancies will be expected to achieve a C by 2030.
The Government also proposes to change how a property’s EPC rating is assessed. Currently, an EPC rating assesses things such as lighting, window glazing, insulation and age, type and construction materials for the property. The consultation proposes to expand these criteria to include a broader range of factors. This is likely to include reviewing heating system efficiency and whether any smart technology has been installed such as a smart thermostat. The broadening of how the EPC rating is graded intends to provide landlords with more flexibility in how they meet the required rating and seeks to encourage landlords to consider a variety of approaches.
The consultation also proposes to increase the cost cap for energy efficiency improvements. Currently, landlords are only required to invest a maximum of £3,500 to meet the standards. However, the consultation proposes to increase this cap to £15,000. Although it is anticipated most commercial landlords will be able to meet this proposed cost cap, the Government has also introduced ‘affordability exemptions’ for instances where the investment of £15,000 is too high. In these instances, the affordability exemption reduces the cost cap to £10,000.
The current validity period of an EPC is 10 years, and under the new rules this could be reduced to five or seven years depending on the size of the property.
The latest MEES consultation also considers imposing greater penalties for failure to comply with the new requirements, from the current maximum fine of £5,000, to a much higher maximum of £30,000 per property, per breach. Clearly the Government intends to increase the incentive for landlords to comply with the new energy efficiency standards and avoid costly fines.
What this means for landlords
For landlords the MEES Consultation 2025 presents a variety of challenges and opportunities. Landlords will no doubt have concerns surrounding the potential investment that will be required in order to make their properties compliant with the raised standards. Landlords will also need to consider the potential diminished market value of their properties if they fail to comply with these new proposals, should they become law.
However, despite these concerns, landlords should embrace this opportunity and the major shift towards a greener private rental sector. The shift creates opportunities for landlords to increase their properties’ investment value, particularly as tenants and investors are increasingly prioritising energy efficient premises.
Whilst the proposals under consideration are not yet law, now is the time for landlords and all those involved in the property sector to start preparing for these changes as the MEES Consultation 2025 is just one step in a broader effort to improve energy efficiency across the property market.
Get in touch
If you would like to discuss anything raised in this blog, please contact Beth Margetson, Phil Hunt or Megan Evans on 0121 236 7288.
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