UK landlords are facing the race against time to ensure their properties meet the incoming efficiency regulations.
The new minimum energy efficiency standards, The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES), have recently passed and come into force from 1st April 2016. With government estimates that changes to energy efficiency requirements will impact around 360,000 properties in the private rented sector, which currently have an F or G energy performance certificate (EPC) rating. They could potential be fines of up to £150,000 if the landlords do not act quickly.
The European Commission has confirmed its supports for new energy efficiency targets for buildings beyond 2020. This support is likely to be replicated by the UK government after the general election, irrespective of which party holds power.
The MEES will come into force on 1st April 2018, requiring landlords of privately rented commercial properties in England and Wales to achieve energy performance of their buildings of at least an E EPC rating upon the granting of a new lease. Similar standards for residential properties have been introduced under the Regulations.
Landlords of commercial properties may face fines of up to £50,000 for breach of the regulations for less than three months, rising to a maximum of £150,000 for breaches over three months. The maximum penalty for non-compliance in respect of residential properties is £5,000. Significantly, local authorities also have the power to publish information regarding non-compliance which could bring significant reputational risks for commercial landlords.
Tenants with existing leases or prospective tenants considering new lettings of property with low EPC rating (especially below an ‘E’), need to be aware of any energy efficiency improvement works and expenditure that the landlord may be planning in order to meet its MEES obligations. Many landlords may be considering a programme of works now to ensure that they can be re-let or continue to let such properties after the deadlines imposed under MEES.
Landlords will also be reviewing existing lease provisions and considering their strategy for compliance with MEES. Tenants need to ensure, where possible, that they do not suffer the disruption of landlord’s works and end up paying their landlord’s energy efficiency improvements. This will depend, to a large extent, upon the precise wording of their lease provisions.