Following the implementation of energy performance certificates (EPCs) to residential and non-residential property in recent years, the regulations regarding the letting of property are shortly to be further tightened. We are currently working with clients to prepare them for the forthcoming changes to establish the best approach for their property portfolios.

As energy costs increase, tenants are increasingly taking more notice of a property’s running costs - heating and lighting are inevitably the main focus.  In order to maintain properties and ensure they make a good rental return in the long term, it is important to maintain and improve stock.

With effect from 1 April 2018, the Minimum Energy Efficient Standards (MEES), require a new legal standard for minimum energy efficiency which will apply to rented commercial and residential buildings. To summarise, the main changes can be outlined as follows: 

Residential

• From 1 of April 2018; unlawful to let a property on a new tenancy in England and Wales with an EPC rating in band F or G, unless the landlord registers an exemption.

• From 1 of April 2020; unlawful to continue to let a property on an existing tenancy in England and Wales with an EPC rating of F or G, unless the landlord registers an exemption.

Non-Residential (Commercial)

When energy is used to condition the indoor climate of a building i.e. heating or cooling systems.

• From 1 April 2018; unlawful to let a property on a new tenancy or extension to or a renewal of an existing tenancy in England and Wales with an EPC rating in band F or G, unless the landlord registers an exemption.

• From 1 April 2023; unlawful to continue to let a property on an existing tenancy in England and Wales with an EPC rating in band F or G, unless the landlord registers an exemption.

Landlords can let a building to which the MEES Regulations apply but which is below the minimum standard if the building qualifies for an exemption.The regulations provide an exemption for situations where the required energy improvements to bring a property rating up to an E or greater would not pay for themselves through energy savings within seven years, the relevant energy efficiency improvements that could be made to the property are likely to reduce the market value of the property by more than 5% or where third party consent is required but has been refused or has been given with conditions with which the landlord cannot reasonably comply.

Properties which qualify for exemption must be registered on the Government’s PRSExemption Register, exemption is for a period of five years, starting from the date on which the exemption is registered, the exemption cannot be transferred to a new Landlord.

This provides some temporary respite from the regulations but with little grant funding available for improvements of this type, review of the legislation is required both to ensure Landlords are not exposed to crippling costs and that any works carried out are appropriate to the character of the building.

Listed Buildings

At present Listed Buildings or buildings within a Conservation Area are not excluded from the Minimum Energy Efficiency Standards and therefore an EPC should be obtained when required; although any recommendations in the EPC which would affect the building’s character or appearance would require Listed Building Consent and some will qualify for exemption on the basis of the market value of the property would be significantly affected.

It is prudent to obtain EPCs for property portfolios now in order to appreciate the extent to which your properties comply with the MEES regulations enabling appropriate management decisions to be made in budgeting for the financial cost of upgrading non-compliant buildings and the potential loss of income if a property cannot be let.

For further information, contact -

Julian Mellis 01244 409666 or email here

Neil Hogbin 01530 410841 or email here