In 2015 laws came in which set Minimum Energy Efficiency standards (MEES) for rented properties. In essence these laws require a rental property to have an EPC rating of E or above from the 1st of April 2018 for new tenancies and from the 1st April 2020 for all tenancies.
There are, however, exemptions such as exceeding the cost cap of £3,500 to bring the property up-to-spec, or where there are no beneficial improvements possible or where the only measures possible are wall insulation and that this would adversely affect the fabric of the property.
The Government, however, has been consulting on changing these MEES laws and this consultation ended on the 8th January 2021 and although the results have not yet been published it is expected that there will be sweeping changes to the current laws on energy efficiency for domestic properties in the private rented sector.
According to the consultation document, the Government is looking to change the rules, as follows:
- Raising the energy performance standard to Energy Performance Certificate (EPC) energy efficiency rating (EER) Band C.
- A phased trajectory for achieving the improvements for new tenancies from 2025 and all tenancies from 2028.
- Increasing the maximum investment amount, resulting in an average per-property spend of £4,700 under a £10,000 cap. The Government believes that this new cap will allow 90% of properties with a rating of D to be improved to a C and 60% of properties with a rating of E to be improved to the new required standard.
- Introducing a ‘fabric first’ approach to energy performance improvements. Under the previous legislation, energy efficiency improvements could be pretty much anything such as upgrading the boiler or putting in loft insulation but these new rules are stipulating that the focus of improvements needs to be the fabric of the building such as door, windows and wall insulation.
- The exemptions will remain relatively unchanged.
Although none of this is yet enshrined in law, it is possible, given the Government’s focus on carbon emissions, that the proposals will be implemented. As a landlord, you might want to consider your options as 2025 will soon be upon us and it is likely that there will be a rush of landlords wanting to make upgrades. In that case there is the potential for there to be material and labour shortages, making upgrading harder. Add to this the fabric first principle, if you are able to make other changes to your property such as loft insulation or a new heating system which takes your property to a C rating, but you don’t have wall insulation for example, then now is the time to make those upgrades to avoid being pushed in the direction of wall insulation. Finally, using the next two years for upgrades allows you to spread the costs rather than facing a large bill if the new rules come into force and you are not compliant.
