An Important but Dull Update on EPC Changes for Landlords

Calling all landlords!

You may well be busy at the moment preparing for possible lockdown… but we’d like to interrupt the general hoarding of hand sanitiser, pasta and toilet paper to bring you an important – if boring – piece of information.

If you’re the landlord of a residential dwelling, you’ll need to be aware of changes to the minimum energy efficiency standards (MEES) for energy performance certificate (EPC) ratings that are coming in at the start of April 2020.

Have we confused you with acronyms already?! If you need help unravelling your MEES from your EPC and understanding how they fit together, keep reading for a whistle-stop tour of what the standards are, who is exempt from them, and what – if anything­ – you’ll need to do in time for the 1stApril.

What are minimum energy efficiency standards and who needs to comply?

 Two years ago, the government introduced minimum energy efficiency standards (MEES) for rented properties. This meant that all new tenancy agreements and renewals for residential properties had to be accompanied by an EPC with a rating of E or above.

There were a confusingly large number of exceptions to this. Most significantly, it didn’t apply to tenancies that were already in place (so long as a tenancy renewal wasn’t necessary).

The other exemptions are in cases where:

  • Each room is being rented out individually as part of an HMO
  • The necessary improvements couldn’t be completed for under a cost cap of £3,500
  • The saving from a necessary improvement wouldn’t cover its own cost within seven years
  • A relevant expert has stated that insulation isn’t suitable for, or would be detrimental to, the property
  • All recommended improvements have been made and the rating remains below an E
  • There are no recommended improvements that can be made
  • The tenant has refused consent for the landlord to carry out recommended improvements (in which case the landlord will have to try again to carry them out either when the tenant leaves or after five years, whichever is soonest)
  • The recommended improvements would devalue the property by more than 5%
  • The landlord has only recently taken over the property (this exemption will last for a period of 6 months)

What’s changing on 1stApril 2020?

 On April 1st, minimum energy efficiency standards will be extended to cover all residential tenancies. You’re not escaping from this completely if you’re a commercial landlord, but you will have until 2023 before you need to worry too much about it.

This means that from next month, if you have a rental property with long-term tenants in place that has an EPC rating of F or G, it will be considered unrentable. And by ‘considered unrentable’, we mean it’ll be illegal for you to continue renting it out unless you’re able to improve the EPC rating to E or above. We rather heavily advise you against breaching this, not least because the government will be levying fines of up to £4,000 for those who do.

What do you need to do now?

The next steps very much depend on the circumstances of your property.

If your property has an EPC rated E or above, you won’t need to do anything right now and can go straight back to checking your stockpiled supplies.

If your rental property is rated F or G but you’ve done a new or renewed tenancy agreement in the last two years and have already applied for an exemption, you’re also off the hook.

However, if your rental property is rated F or G and you haven’t previously needed to apply for an exemption, you will need to do so ASAP.

This can be done online at the PRS Register. Evidence will be needed for each exemption; the government guidance on thisshould make it reasonably clear which documents you will need to provide.

Still not sure? If you’re completely confused about all of this, you know where to find us. Get in touch and we’ll do our best to work out where you stand in all of this and what, if anything, you need to do next.