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New Minimum Energy Efficiency Standards to come into force for landlords

Landlords are being urged to comply with updated regulations in relation to minimum energy efficiency standards (MEES).

Since April 2019 new rules apply to energy ratings which affect a landlord’s ability to agree a new letting or tenancy.

Landlords now have to contribute up to £3,500 per property towards raising the rating on a domestic property above an E grade EPC assessment – previously there was a ‘no cost to the landlord’ exemption although the grading of F/G had been barred from rental agreements under 2018 legislation.

From April 1st this year, the E or above regulation will apply to all tenancies, old and new.

For existing properties, where the “no costs to the landlord” exemption applies, they will remain on the exemptions register until 31st March 2020, when they will also be removed and thereafter Landlords will have to contribute up to £3,500 for improvements.

If the costs of making improvements to a sub-standard property are above £3,500, and the Landlord can evidence this with three separate quotes, then the Landlord can apply for an exemption for any cost over the £3,500 cap. If a Landlord has made any energy improvements since 1st October 2017 (up to 31st March 2019) then those costs can be deducted from the £3,500 cap.

If a Landlord has already registered for an exemption (i.e. where a tenant has not consented to improvements being made), then the Landlord will not be able to rely on that exemption once that particular tenancy has ended.

According to  the Residential Landlords’ Association, if a residential building is exempt ( for example listed buildings and those in conservation areas) from the requirement to have an energy performance certificate when it is rented out (or sold) then this minimum E rating standard does not apply. Although the Association says ‘the legislation is ‘badly drafted and unclear” so may not be safe to follow.

Most alterations required to bring a property in line with the appropriate energy rating are not prohibitively expensive and should be recouped from securing new tenancy agreements.

The Government is now consulting on ‘how best to improve the energy performance of non-domestic private rented buildings through tighter minimum energy.’

This consultation outlines two different targets the Government could set to tighten minimum energy efficiency standards. The Government’s preferred target is that landlords of all non-domestic privately rented properties in England and Wales ensure their properties achieve a minimum energy efficiency standard of Energy Performance Certificate (EPC) band B by 2030, provided the action required is deemed cost effective by meeting a seven-year payback test.

If you own a rented property and would like advice on how you can make cost effective alterations to make your property more energy efficient and improve its EPC rating, get in touch with us today.

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