The Minimum Energy Efficiency Standards Plans – Impact on Landlords
The introduction of new regulations requiring landlords to improve energy efficiency standards could have a significant impact on rental incomes and property prices. This, according to the law firm Maples Teesdale, is the likely outcome of the Government plans to introduce what it has termed the Minimum Energy Efficiency Standards (MEES).
The new regulations went through the consultation stages in August and September of last year and are expected to be set out by the election in May, before coming into force in part in 2018 with further rules being enforced in 2023.
The MEES rules will be administered by Trading Standards and carry a potential civil penalty in the case of landlords failing to meet them. In short they mean that all landlords will have to achieve either a D or E – which is yet to be confirmed – on their Energy Performance Certificate (EPC). The rules will come into force on properties where a new lease is being made to a new tenant on 1 April 2018. For all other lettings types, including renewals, the MEES rules will be enforced from 1 April 2023.
There will be some exemptions – short leases, leases of over 99 years, and cases where the landlord has taken all the necessary energy efficiency steps laid out in the Government’s Green Deal scheme but have still not reached the D or E rating will be given exemptions from the new rules.
The intention of the new rules is to ensure rogue landlords can no longer hide away from energy saving measures. However, the suggestion of Maples Teesdale goes, the impact on the private rented sector could be negative overall.
With the prospect of penalties for properties that fail to meet the new energy efficiency savings including tribunals and fines, and the more obvious issue of costs incurred to improve properties, the legal firm believe that landlords will be put off making investments in new properties that may require additional work to bring them up to scratch. This could affect the buy-to-let market, leave more properties unsold, and impact on prices.
This is all a long way off, though. The rules may well have an effect on the market but all they really represent is an extension of the EPC that must be provided for every private property on the rental market.
Along with fire safety standards, and gas and electricity checks, the EPC must be provided by landlords with information on the energy use of the property. Many landlords are already taking steps to improve their energy efficiency and there are several grant schemes available specifically to help landlords.
Organisations such as local councils and the Energy Saving Trust offer help and financial support. The Government also offers the Landlord’s Energy Saving Allowance to help towards costs incurred for cavity wall, loft, floor, solid wall and hot water system insulation, and for draught-proofing.