Posted on 16 September 2023 by the Rent Reporting Team
The horizon brings new EPC rules and MEES regulations, making it essential for every landlord to be well-prepared.
With the government progressing on its energy efficiency agenda, EPC regulations are currently under thorough review and revision. Despite starting a consultation in 2020, the final legislation for England and Wales remains unclear. This uncertainty poses challenges for landlords striving for compliance. Let's delve into the current EPC requirements and explore the potential changes in the near future.
What are the current EPC rules and requirements?
Since 2008, it has been a legal requirement to have an Energy Performance Certificate (EPC) when selling or renting a property.
The Minimum Energy Efficiency Standard (MEES) implemented in April 2018, mandated that all properties for rent or sale in England and Wales have at least an ‘E’ EPC rating.
By April 2020, MEES was expanded to include all existing tenancies, not just new agreements or renewals. Consequently, leasing a property without a valid 'E' or higher EPC rating is illegal.
Non-compliant landlords face fines up to £5,000.
What are the new EPC rules and requirements for landlords?
In December 2020, the government proposed increasing the Minimum Energy Efficiency Standard for privately rented properties to an EPC grade ‘C’.
These new rules are suggested for introduction in 2025 for new tenancies and all tenancies by 2028. However, ongoing discussions with landlords and stakeholders might change this timeline.
The Department for Energy Security and Net Zero may potentially scrap the 2025 deadline, requiring all rental properties to achieve an EPC rating between ‘A’ and ‘C’ by 2028 instead.
Additionally, the penalty for lacking a valid EPC may rise from £5,000 to £30,000 by 2025.
How can landlords prepare for the new EPC regulations?
Nearly 40% of privately rented properties in England and Wales currently hold EPC grades below ‘C’.
Upgrading from 'E' to 'C' will likely require significant effort and investment, estimated at around £4,700 by the government.
Gradually upgrading your properties can spread out the costs. For instance, start by adding extra loft insulation one year, then focus on improving wall insulation or upgrading windows and doors the next.
Early action is advisable as the demand for skilled tradespeople will likely increase as the deadline approaches.
Additionally, if your property may qualify for a MEES exemption, it's important to register as soon as possible.
What are the current exemptions from the EPC and MEES regulations?
Landlords can apply for a MEES exemption if:
Their property has a low energy rating and cannot be improved to meet the minimum ‘E’ rating.
The exemption registration is free but requires evidence submission to prove the exemption reason.
Exemptions include:
‘High cost’ exemption
‘7 year payback’ exemption
‘All improvements made’ exemption
‘Wall insulation’ exemption
‘Consent’ exemption
‘Devaluation’ exemption
‘New landlord’ exemption
Currently, some properties may be exempt from EPC regulations if the upgrade cost exceeds £3,500. However, if the government's proposal proceeds, this figure may increase to £10,000 by 2025.
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