By James Phelps, Solicitor, Penman Sedgwick LLP
In 2016 The Energy Efficiency Regulations 2015 established new Minimum Energy Efficiency Standards (sometimes referred to as the MEES Regulations) in the private rental sector.
Not only do the MEES Regulations set energy efficiency standards that must be met before properties are let (unless a legitimate reason for not doing so can be claimed), they also give some residential tenants rights to make energy efficiency improvements despite restrictions that may be contained within the Lease.
The aim of the regulations is to improve the quality of private rented buildings and to reduce overall emissions in line with the Government’s environmental targets. From 1st April 2018 the letting of properties with an EPC (Energy Performance Certificate) rating of below ‘E’ was prohibited. Under the current rules 20-25% of residential/commercial properties in England and Wales fall below this standard.
The UK Government has indicated that it intends to raise the minimum standard for lettings to render it unlawful to let properties with an EPC rating of ‘D’ by 2025 and ‘C’ or even ‘B’ by 2030.
According to government figures this would result in 85% of current leasehold properties being classed as unlettable. While increasing the relative bargaining power of tenants, landlords will likely encounter a multitude of challenges bringing their property portfolios up to the required standard in the years to come.
The regulations will need to be considered by landlords when:
- Acquiring Leases
- Drafting Leases
- Determining whether your property is covered by the regulations
- Managing properties
- Commissioning an up-to-date EPC
- Assessing what action needs to be taken to improve the EPC rating
- Selecting energy efficiency measures
- Funding property improvements
- Setting long-term energy performance standards
- Examining enforcement and penalties
- Conducting portfolio assessments
- Selling unlettable properties
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