A landlord’s guide to MEES · A landlord’s guide to MEES 5 The penalties listed opposite apply...
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A landlord’s guide to MEES
Transcript of A landlord’s guide to MEES · A landlord’s guide to MEES 5 The penalties listed opposite apply...
A landlord’s guide to MEES
1 April 2018 saw the introduction of new laws regarding the minimum energy efficiency standards (MEES) for privately rented properties throughout the UK. If you are a landlord in either the residential or commercial property sectors, these new regulations affect you. Failure to meet the minimum requirements could result in significant financial penalties. Read on to find out why the time to act is now.
What is MEES?The minimum energy efficiency standards was introduced as part of the Energy Efficiency (Private Rented Sector) (England and Wales) Regulations 2015. As of 1 April 2018, MEES will affect privately rented properties, requiring all lettings of this nature to meet a minimum standard on energy performance.
Why does MEES affect me?As a landlord, it is your responsibility to ensure that the property (or properties) you rent out meet with the new energy requirements. Choosing to disregard them will mean you are breaking the law, the penalties for which include substantial fines.
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MEES and EPCsThe minimum energy efficiency standards will use Energy Performance Certificates (EPCs) as a gauge to whether a property complies with the new law.
EPCs were introduced in 2007, the result of a directive from the European Union, and provide a rating which corresponds to the energy efficiency of a building. Assessed by an accredited assessor, a property will be rated on a scale of A to G, with ‘A’ representing the most energy efficient and ‘G’ the least.
Subject to certain limited exemptions, all properties that are rented out, whether in the residential or commercial sector, must have an EPC, containing an energy efficiency rating, information about the energy usage and energy costs, and recommendations as to how energy efficiency can be improved. An EPC lasts for 10 years and failure to provide a valid one on request can lead to a fixed penalty.
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So what do the new rules say?The MEES regulations that came into force at the beginning of April 2018 state:
• It is illegal for you to rent out a property which has an EPC rating of ‘F’ or ‘G’•Anypropertywithintheprohibitedbandswillbeclassifiedas‘substandard’•Failuretocomplywiththeregulationswillresultinseverefinancialpenalties.
At present, the rules apply only to new leases or the renewal or extension of an existing one. This means if you are currently renting a property and the lease pre-dates 1 April 2018, you are not currently breaking the law. If you have not taken the required measures to improve your property’s EPC rating by the time the lease comes up for renewal and you continue to rent it out, this status will, of course, change.
This period of grace is set to end over the course of the next five years. Continuing to rent a property that is classified ‘substandard’ will become illegal on:
• 1 April 2020 – residential rental properties• 1 April 2023 – commercial rental properties.
It is worth noting there are currently exemptions and exclusions that allow for a new lease or the renewal of an existing lease to be granted on properties with ‘substandard’ energy ratings (see next page).
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What are the penalties if I fail to comply with the MEES regulations?Local authorities are responsible for enforcing the regulations and have harsh financial penalties at hand to punish those who break the law. Although it is at the discretion of the local authority as to the amount of the penalty it chooses to impose, the maximum levels available depend upon whether it is a residential or a commercial property.
If you are accused of renting out a property that does not meet the energy rating requirements of MEES, the maximum penalties you may face are as follows:
Residential properties
• Letting a ‘substandard’ property for a period of less than three months - £2,000• Letting a ‘substandard’ property for a period of three months or more - £4,000• Registering false or misleading information to qualify for exemption - £1,000• Failing to obey a compliance notice - £2,000.
Commercial properties
• Letting a ‘substandard’ property for a period of less than three months - £5,000 or up to 10 per cent of the property’s rateable value (whichever is greater), subject to a maximum penalty of £50,000
• Letting a ‘substandard’ property for a period of three months or more - £10,000 or up to 20 per cent of the property’s rateable value (whichever is greater), subject to a maximum penalty of £150,000
• Registering false or misleading information to qualify for exemption - £5,000• Failing to obey a compliance notice - £5,000.
There is also the possibility of the local authority imposing a ‘publication penalty’, more commonly known as ‘naming and shaming’. Your name will not be published if you are an individual landlord.
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The penalties listed opposite apply to each individual breach of MEES regulations, so, for example, if you are found to have leased three residential properties, all of which are in the ‘F’ or ‘G’ bands for energy efficiency, you would be fined for each one, which could mean a maximum combined penalty of anything from £6,000 to £12,000.
How do I claim exemption from MEES regulations?There are both permanent and temporary exemptions allowing you to grant a new lease upon a property with a ‘substandard’ EPC rating.
Permanent exemptions are given to properties:
• That do not require an EPC, such as industrial sites and some listed buildings• Where the EPC is more than 10 years old• With a tenancy of less than six months•Withatenancyinexcessof99years.
A temporary exemption may be granted if you can show that:
•Youhavebeenprevented,withinthepreviousfiveyears,fromundertakingimprovementstoincreasetheproperty’sEPCratingbecauseofalackofconsentfromathirdparty,suchasatenant,alenderorafreeholder
•AnyworktoimprovetheEPCratingofyourpropertywilldevalueitbyfiveormorepercent• An independent assessor has determined all possible improvements have been made to the property or that energy
savings would not pay for further improvements within seven years• The required improvements are not cost effective for ongoing commercial viability•Youhaveunexpectedlybecomethelandlordoftheproperty,e.g.asaresultofinsolvencymatters.
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Exemptions, which cannot be passed on to new landlords, must be registered on the PRS Exemptions Register.
An exemption will last for five years, in which time you will have to make the required improvements to lift your property out of the prohibited EPC bands, or, once the time limit has passed, cease renting it.
A new landlord taking over a property classified as ‘substandard’ will have a six month period of grace in which to get the property compliant with MEES.
How can Reynolds Parry Jones help me?If you are a landlord affected by MEES, we are here to help. We can provide professional advice regarding your obligations pursuant to the new regulations.
To ensure you are on track to avoiding a heavy fine, contact our Property Team today.
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Our Property TeamThe information in this leaflet is intended as a guide only and does not constitute legal advice. We would be pleased to answer any questions or give legal advice relating to any of the matters raised in this guide. Please don’t hesitate to contact a member of our Property Team today.
Graham KingSenior Partner
Graham graduated from the University of Bristol in 1978 with a Bachelor of Laws degree (LLB with Honours) and was articled at Pitmans, a commercial firm in Reading, and qualified as a solicitor in April 1981. He joined the firm as an assistant solicitor in 1982, becoming a partner in 1983. Since 1998, he has been head of the commercial team in the firm and became senior partner in 2011.
01494 525941
Kalbir GillPartner
Kalbir Gill joined Reynolds Parry Jones LLP as a solicitor in our Commercial Property department in July 2017 from a firm in Gerrards Cross, where she acted for high net worth individuals.
01494 525941
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Carole PageAssociate
Carole joined the firm in September 2014, having previously worked for a firm in Chesham since 1988. Originally employed there as a legal secretary, she was determined to become a fee-earner and embarked on a correspondence course to become a legal executive, a qualification she achieved in 2000. Carole was appointed as an Associate of the firm in April 2017.
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Charlotte KernsPartner
Charlotte graduated with a first class degree in Law from Cardiff University in 2013 and achieved a distinction in her Legal Practice Course at The University of Law in the summer of 2014. She joined the firm as a trainee solicitor in September of that year.
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Ella May FosterSolicitor
Ella-May Foster joined Reynolds Parry Jones in 2016 as a paralegal after graduating from Bangor University with a first class degree in Law. She then completed her Legal Practice Course (LPC) – the vocational stage of training to qualify as a solicitor – at BPP University in London whilst completing her Training Contract with Reynolds Parry Jones. Ella-May qualified as a Solicitor in October 2019.
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Shaz HafeezSenior Solicitor
Shaz Hafeez joined Reynolds Parry Jones LLP in February 2019 as Senior Solicitor in the Residential Property Department. Shaz graduated from De Montfort University in Leicester with a Law degree (LLB with honours) and qualified as a Solicitor in London in 2004.
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