The Minimum Energy Efficiency Standard (MEES) is a regulatory requirement that applies to all private residential properties. It requires all aforementioned properties to have an Energy Performance Certificate (EPC) rating of E or above. Failure to meet these requirements can result in restrictions on the granting and continuation of existing tenancies.
More than 400,000 residential properties in England and Wales could be left empty if landlords fail to comply with the regulations, which will have a huge impact on the UK property market as a whole.
Landlords must now take action to ensure their properties are rated E or higher on the EPC scale. If they fail to comply, they could face a financial penalty from the Local Weights and Measures Authorities (LWMAs) as well as a publication penalty (where the LWMA publishes some details of a landlord’s breach, on the publicly accessible part of the PRS Exemptions Register). The maximum penalties are:
- If the landlord has let a sub-standard property that is in breach of the Regulations for up to three months, they face a financial penalty of up to £2,000 and a possible publication penalty
- If the landlord has let a sub-standard property that is in breach of the rules for three months or more, they face a financial penalty of up to £4,000 and a possible publication penalty.
- If the landlord has registered false or misleading information on the PRS Exemptions Register, they face a financial penalty of up to £1,000 and a possible publication penalty.
- If a landlord fails to comply with a compliance notice they face a financial penalty of up to £2,000 and a possible publication penalty.
Why was MEES introduced?
The Energy Efficiency regulations, created in 2015, have been designed to tackle the problem of non-energy efficient properties in England and Wales.
Energy Performance Certificate (EPC) ratings for residential properties are assessed on a scale from A- G, with A granted to the most energy-efficient homes, and G the least. EPC F and G rated properties waste energy, add unnecessary costs onto tenants and contribute to avoidable greenhouse gases, which are harmful to the environment.
If landlords adhere to the MEES regulations that are now in force:-Tenants (especially vulnerable ones) are able to enjoy better living environments and lower energy bills, thanks to more energy efficient homes
- Landlords experience lower maintenance costs and improvements in the conditions of their property
- There will be less demand for energy during seasonal peaks, helping the UK's energy security
- Greenhouse gas emissions will be reduced
Does MEES apply to all rented commercial buildings?
MEES may not apply to a building if:
- A building has a tenancy of fewer than 6 months (with no right of renewal)
- A building has a tenancy of over 99 years
If a property's current energy assessment was carried out more than 10 years ago, it will no longer be accurate as the criteria for the different bands has now changed, and will be due another assessment.
What does MEES mean for landlords?
Landlords are likely to be the group of people most affected by MEES. They now have a responsibility to know the EPC ratings for all their properties. If any of their properties are a grade F or G, they must make the changes necessary to increase the rating, or they may not be allowed to legally lease the property.
The MEES Regulations will be enforced by Local Weights and Measures Authorities (LWMAs), and there are some hefty penalties for non-compliance, as mentioned above.
Landlords may also see the MEES regulations as a financial burden, thanks to the cost of upgrading non-compliant buildings and the potential loss of income if a tenancy cannot be renewed on a property.
However, energy efficiency improvements can also hold many benefits for landlords. These include:
- Increased tenant satisfaction
- Reduced void periods
- Reduced long-term property maintenance costs
- Properties become easier to let
- The market value of the building will increase
What can landlords do now?
All landlords must clarify their EPC rating and ensure it is above an F on the scale. This can be done by carrying out energy assessments to check whether the EPC rating on their properties is correct, and is above an F rating.
If they find that their property is an F rating or below, they must begin to rectify this to maintain the right to grant or retain tenancies. Where a property is at EPC E or above, the landlord will not be required to take any further action in order to comply with the regulations; however, an update in energy efficiency can be financially beneficial regardless of your rating
If a property is below a E rating, it is the responsibility of the landlord to bring it up to standard. This could mean substantial costs, but if changes are not made then landlords could face a complete loss of rental income.
However, to avoid disproportionate costs, landlords are not required to install measures where the improvement costs will not be received back within seven years through reduced utility bills or increases in rent.
The Green Deal
Many landlords will also be able to access financial assistance with the Green Deal, which was introduced in 2013. The Green Deal is a finance mechanism which enables landlords to take out loans to pay for energy efficiency improvements in their properties to help them comply with the Regulations. Repayments are then made through their energy bill on a Pay As You Save basis.
The gradings systems
The energy performance certificate is a grading system, rated A-G. The system is a list of statistics about the energy efficiency of a property and carry ratings on energy use and carbon dioxide emissions. Once a property is given a rating, they will receive information which includes:
- Estimations of the amount of energy the property currently uses
- Carbon dioxide emissions
- Fuel costs
- Information on how properties can increase their rating
Landlords should follow the recommendations on their ratings if they are required to increase their overall energy performance rating.
Example of an Energy Efficiency Rating
Mike Edwards from Love Energy Savings said:
“The fact that one in four landlords are currently unaware of the energy rating of their property shows just how important the MEES regulations are. It’s now vital that landlords are aware of the energy efficiency rating of their properties, and the steps they can take to improve their ratings.
“Landlords shouldn’t delay in making any improvements that are required as they need to factor in how long the changes will take to make and the costs that may be involved.
“Although these regulations may initially be an inconvenience for landlords and potentially tenants, they are incredibly important for energy conservation and will actually help both parties save money in the long run.”
If you need any more information about energy efficiency measures, take a look at our useful guides. If you think switching energy provider would benefit you, take a look at how we can help you save money.