Landlords face fines, loss of rental income and reduced property value by not reacting to new Minimum Energy Efficiency Standards for Leases

April 25, 2018

A leading property law specialist has warned that many landlords are unaware of the new Minimum Energy Efficiency Standards (MEES) Regulations, which came into force on April 1.

Under the new regulations, where a property requires an EPC, domestic and commercial rental properties are required to meet at least an Energy Performance Certificate (EPC) level E or above.

Liz Brady, Partner at law firm Furley Page, explains: “As a result of the new regulations, landlords are no longer able to grant leases to new tenants if the property has an EPC band rating of F or G.

“However, there are still many landlords out there who are either unaware of the changes to the law, or who are aware but are not sure how to address the issue.

“It is important that landlords comply with the new regulations, as failure to achieve the minimum EPC rating will require alterations to the property to improve its energy performance, which may take months to rectify.

“This could lead to lost income, as the property cannot be let until the works have been completed. The investment value of the property would also be affected until the necessary alterations have been carried out. There are also significant fines for landlords that are in breach of the new rules.”

Landlords face fines of £4,000 if a leased residential property is found to have a rating below the new standard, and up to £150,000 for leased commercial property. The rules apply initially to new tenancies or lease renewals, but in 2020 will apply to all existing domestic properties in 2023 and to all existing leased commercial properties. .

Liz continued: “There are some exemptions to the MEES Regulations, but an EPC is required for the vast majority of rented commercial and residential property, including sometimes those with Listed building status. Landlords should review the Government’s guidance on EPCs and MEES Regulations carefully and take steps to ensure they comply with the new regulations.”

What is an EPC?

An EPC is a report issued following an inspection by a qualified energy assessor, which sets out the energy rating for a building. The report rates the building’s performance from A – G (with G being the least efficient), and provides recommendations on how the energy performance of the structure can be improved.

Liz Brady is a member of Furley Page’s highly-regarded Real Estate team and she has extensive experience of advising clients on a range of property transactions. She is a member of the Commercial Real Estate Legal Association and the Kent Law Society.

For more information and advice on property call Liz Brady on 01227 763939.