On February 7, the UK Government launched a consultation to discuss potential updates to the Minimum Energy Efficiency Standards (MEES) for the private rented sector (PRS) homes in England and Wales. This initiative is part of a broader conversation about the Energy Performance Certificates (EPCs) system, underscoring the government's commitment to improving energy efficiency in the housing market. We caught up with Rosie Theaker, a senior associate in our rural property management team, to understand how these proposed changes might affect our clients.
Previously, the government plans to upgrade MEES to an EPC ‘C’ rating by 2025 for new tenancies and 2028 for existing ones were shelved in September 2023, creating uncertainty among landlords. The current government aims to revive and extend these targets, proposing that landlords meet EPC ‘C’ by 2028 for new tenancies and 2030 for existing ones. This move is part of a broader strategy to improve energy efficiency and reduce carbon emissions.
Currently, farmhouses let as part of agricultural tenancies after 2008 require an EPC but are not included in the definition of “domestic” properties under MEES regulations where only those properties let on certain named tenancy types are referenced. The term "non-domestic" properties, which excludes dwellings, does not apply to farmhouses as they are inherently residential. Although the current MEES regulations do not explicitly address farmhouses within agricultural tenancies, the government's push towards net zero suggests that these properties will likely be included in future regulations
The changes do pose a challenge for landlords who are planning for the future. The consultation explores several metrics for assessing energy performance, including fabric performance, smart readiness, and heating systems. These metrics are designed to provide a comprehensive evaluation of a property's energy efficiency, considering factors such as insulation, the integration of smart technologies, and the efficiency of heating systems.
The Government is proposing that Landlords meet a standard set against two of the three metrics outlined above however, the consultation paper presents alternatives to this approach, so this is subject to change.
The EPC exemptions available, particularly regarding financial considerations are a significant aspect of the consultation. The proposed increase in the cost cap exemption to £15,000 from £3,500 reflects inflationary pressures. There is also the potential introduction of a new affordability exemption, which could adjust the cost cap based on factors such as rental income or local housing allowance rates, seeking to address the financial disparities among landlords.
The consultation also addresses the inclusion of short-term lets, proposing that properties occupied for less than 31 days should meet the new MEES of EPC ‘C’. This move aims to prevent landlords from circumventing the regulations by converting properties to short-term lets.
Transitional arrangements are proposed to reward landlords who have already taken steps to meet EPC ‘C’. Those who comply under the current regime will be considered compliant until their certificate expires. However, landlords with properties not meeting EPC ‘C’ will need to obtain new certificates by 2030.
As the consultation progresses, landlords are encouraged to review the proposals and prepare for potential changes. The deadline for responses is May 2, providing an opportunity for stakeholders to influence the final regulations.
The proposed changes to MEES represent a significant step towards improving energy efficiency in the PRS. By understanding and preparing for these changes, landlords can not only ensure compliance but also contribute to broader environmental goals. The consultation period is a critical time for landlords to engage with the proposals and plan for the future.
More information about the consultation can be found here.
