In the private rented sector 11% of houses have an EPC rating of “F” or “G”, compared to 9% in the owner occupier sector. The Energy Act 2011 was introduced as one of its goals to specifically to target this rented sector and reduce the number of fuel poor homes in the UK. Therefore, under the Energy Act 2011, Minimum Energy Efficiency Standards (MEES) are being introduced to increase the energy efficiency of let properties and will require the property to obtain an EPC rating of “E” or above to continue to be let without penalty.

The regulations will be introduced from April 2018 and will apply to new leases and renewals/extensions to an existing tenant. From April 2020 the regulations will apply to all privately rented properties in the scope of the regulations. The regulations only apply where there is an existing EPC or the property is required to have an EPC either at point of sale or let with no distinction between a marketed or non-marketed transaction. However, not all transactions will be considered as a sale or let and therefore it is important an EPC is not commissioned when not required, exposing the property to MEES risk.

EPCs were introduced in 2007 to inform potential buyers or tenants about the energy efficiency of a property, since then they have evolved including a new format and increased auditing in 2012 increasing accuracy of the ratings over earlier EPCs.

While landlords and estates are starting to become more aware of the new legislation it is important they start planning for the change or risk losing rental income or receiving large fines, the first step for most landlords should be to review EPCs they have now.

Planning now could mean savings in the long-term from incorporating property efficiency upgrades into standard maintenance schedules and spreading out the cost of any works over a longer period of time.

The looming pressure of MEES should push landlords to actively seek to improve their EPC ratings and a number of clients have begun to explore what we call the ‘Positive EPC’ approach. In this situation an assessor would undertake a ‘mock’ assessment, providing a pre-registered score for the building in its current condition and then provide advice on how to improve this with the most cost-effective methods and how this changes the EPC grade.

Continuing to prepare for MEES with a Positive EPC review of a portfolio will allow you to plan management of the portfolio in the run up to April 2018 and ensure those properties that need to meet the standards can be improved before the relevant deadlines.

For more information on this topic, please contact Andrew Crowther on 07825698724 or via email.