What is changing for EPCs and what does that mean for you?
On April 1 2018, a major new piece of legislation came into force in an attempt to improve the energy efficiency of homes in the PRS. MEES made it mandatory for all rental properties being let out as new tenancies, or the renewal of existing tenancies, to have an EPC rating of E- or above.
From April 1 2020, this will apply to all existing tenancies, no matter when they started, which means it will be unlawful to rent out a home which falls below the required standards unless there is an applicable exemption. Landlords who don’t adhere to the rules could face a civil penalty of up to £5,000 for non-compliance, with the potential fine varying depending on the length of the breach. Tenants can raise a case with the First-Tier Tribunal General Regulatory Chamber if they feel their landlord is breaching the legislation.
Government figures have previously stated that there could be up to 285,000 properties in need of urgent work. Most landlords will be unaffected by the changes as their properties are already compliant, but there is still likely to be a small portion of rental homes which don’t meet the required standards, especially older and period properties which weren’t designed with energy efficiency in mind.
As a landlord, you must comply with the strengthened MEES regulations regarding existing tenancies, unless you can rely on one of a few exemptions available to landlords. This includes but is not limited to:
- Exemption due to devaluation – a temporary exemption of five years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of the property by more than 5%.
- Exemption for new landlords – if a person becomes a landlord recently or suddenly in specified circumstances under the MEES Regulations, a temporary exemption of six months will apply.
- Third party consent – if a landlord cannot obtain necessary third party consents to improve the EPC rating of the property (including but not limited to lender consent, superior landlord consent and/or tenant consent), then a landlord may let a ‘sub-standard’ property.
A landlord, or a letting agent on their behalf, wishing to apply for an exemption must register it on the Online Private Rented Sector Exemptions Register.
Local authorities give and keep fines for non-compliance, so are incentivised to enforce the legislation. This means any landlord thinking of trying to skirt around the rules should think again.