The Minimum Energy Efficiency Standard (MEES) which came into force in England and Wales on 1 April 2018, applies to private rented residential and non-domestic property and is aimed at encouraging landlords and property owners to improve the energy efficiency of their properties by a restriction on the granting and continuation of existing tenancies where the property has an Energy Performance Certificate Rating of F and G.
The Minimum Energy Efficiency Standard Rating is E and above.
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (Principal Regulations) as amended by The Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2016 enforces the Standard.
An Energy Performance Certificate sets out the energy efficiency rating of a property with recommendations on improving its energy efficiency. Any property which has been marketed or let since 2008 requires an EPC which lasts for 10 years with certain exceptions. See Energy Energy Performance Certificates Guidance.
Non-domestic private rented property
Subject to some prescribed exemptions Part 3 of the Principal 2015 Regulations states that a landlord must not grant a new tenancy (including a renewal tenancy) of a property after 1 April 2018 or continue to let any property after 1 April 2023 where the property has an EPC Rating of F or G.
It is not clear who will be responsible for bearing the cost of energy efficiency improvement work ie landlord or tenant. The lease of individual properties should be the first point of reference for both parties on deciding whether energy efficiency improvements are viewed as repairs or improvements.
Where a landlord is granting a new lease he/she may wish to incorporate drafting into the service charges expressly allowing energy-efficiency improvements in the future.
Installation of energy efficiency improvements will only be required for a non-domestic property where the recommended achieves an energy efficiency payback of seven years of less. Unlike residential property there are no third-party funding resources available for improvements and so any improvements will be funded by landlord or tenant.
Landlords may be able to claim exemptions in certain circumstances. Such exemptions must be registered on the National PRS Exemption Register.
MEES does not affect existing landlord and tenant obligations including rent reviews, terminal dilapidation and lease renewal.
Guidance for landlord and enforcement authorities on the minimum level of energy efficiency required to let non-domestic property under the Energy Efficiency (Private Rented property) (England and Wales) Regulations 2015.
Our UK Insight Paper Minimum Energy Efficiency Standards (MEES): Impact on UK property management and valuation provides an introduction to MEES and the potential impact of the regulations on UK property management and valuation.