Agents warned over new energy rules

A legal firm is warning agents and landlords that they have less than three months to prepare for the latest MEES regulations on energy efficiency in rental properties.

City law firm Fladgate says that for the past 21 months there has been a requirement under the Minimum Energy Efficiency Standards for any new tenancies or tenancy renewals of properties rented in the private rented sector to have a minimum energy performance rating of ‘E’ on an Energy Performance Certificate.

It has therefore been unlawful for an agent or landlord to let a non-compliant property with an EPC rating of F or G.

However, from April 1 this year the MEES will be tightened even further and will apply to all existing tenancies, even where tenants are staying in place.

This means that it will be unlawful to rent a property - regardless of whether it is a new tenancy, a renewal tenancy or an existing tenancy - which breaches the requirement to have a minimum E rating on an EPC and a landlord must carry out works to bring the EPC rating to E or above, unless there is an applicable exemption.

Advice from Fladgate says: “If your property is caught by the EPC regime, you must comply with the MEES Regulations, unless you can rely on one of a few exemptions available to landlords, including but not limited to:

- Exemption due to devaluation – a temporary exemption of five years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of the property by more than five per cent;

- Exemption for new landlords – if a person becomes a landlord recently or suddenly in specified circumstances under the MEES Regulations, a temporary exemption of six months will apply; and/or

- Third party consent – if a landlord cannot obtain necessary third party consents to improve the EPC rating of the property (including but not limited to lender consent, superior landlord consent and/or tenant consent), then a landlord may let a “sub-standard” property.

An agent or landlord wishing to rely upon an exemption must register an exemption on the online Private Rented Sector Exemptions Register. Local authorities give and keep these fines and so are incentivised to enforce the legislation.”

The law firm goes on to warn that for those who fail to comply there are financial penalties, which vary depending upon the length of the breach.

A landlord renting out a non-compliant property (less than three months in breach) may be fined up to either £5,000 or 10 per cent of a rateable value up to a maximum of £50,000, whichever is greater.

A landlord renting out a “non-compliant” property (three months or more in breach) may be fined up to either £10,000 or 20 per cent of the rateable value up to a maximum of £150,000, whichever is greater.

There is also a fine of up to £5,000 for providing false or misleading information, or failing to comply with a compliance notice.

And the MEES challenge may not end there. Fladgate warns: “There is speculation that MEES will rise again in 2022, making ‘C’ or ‘D’ the new minimum requirement. When considering any works to upgrade a property to comply with the MEES Regulations for April 2020, landlords should also bear in bind the potential future impact of the regulations.”