Energy Efficiency Standards & Residential Lettings

• United Kingdom

• Real estate

06-11-2018

The Government response to its consultation on whether landlords of domestic property should be obliged to spend their own money improving the energy efficiency of let residential property has been published. When Parliamentary time allows (likely during the course of next year) the MEES Regulations will be amended so as to oblige landlords of residential property to spend at least £3,500 on making energy efficiency improvements to sub-standard properties in order to improve those properties to an EPC rating of E or as close to that as possible.

The previous “no-cost” exemption which allowed landlords to let substandard properties regardless when there was no “Green Deal” or similar funding available to them, will be abolished.  If spending up to the £3,500 limit isn’t enough to leave the premises at an EPC rating of E or above then the landlord will be able to claim the existing exemption that all relevant improvements have been made but the property remains below an E rating.

Key points

• Apparently less than 6% of the overall domestic rental property market in England and Wales will be affected by the amendments to the Regulations, so whilst there will be a hard cost involved for landlords this won’t arise very often.
• The £3,500 figure is higher than the £2,500 suggested in the consultation but is now inclusive of VAT.
• The amended Regulations will apply as soon as they come into force to the granting of a new tenancy agreement of residential property, whether that is to a new tenant or an existing tenant. They will apply to all privately rented property as of 1 April 2020.