MEES re rural properties

Since 1^st April 2018 under Minimum Energy Efficiency Standards (MEES) private rented properties could only be rented out to new tenants if the property had a minimum energy efficiency rating of E.  Therefore properties with a rating of F or G could not be rented out.  Landlords were obliged to carry out improvement works to the property to increase the energy rating in order to be able to let out a property again.

If the costs of the landlord making those necessary improvements were more than £3,500 (including VAT) then the landlord was able to make improvements up to that level of expense and then apply for an “all improvements made” exemption.  Where third party funding was available (for example a grant to install loft insulation) that cap did not apply.

From 1st April 2020

As from 1^st April 2020 the prohibition on letting properties with F or G ratings will extend to all relevant properties even where there has been no change in tenant.  This means that landlords have had until that date to bring a non-compliant property up to minimum standards if it wanted to continue a letting.

As the MEES regulations apply to “domestic private rented property” those regulations are relevant not just to Assured Shorthold Tenancy (also known as ASTs and being the most common form of tenancy) but also to assured tenancies and assured agricultural occupancies of farmhouses and farm cottages under the Housing Act 1988 and the Rent (Agriculture) Act 1976.

There are a number of rural residential lettings which fall outside the requirement to have an EPC.

Residential property let as part of a FBT (Farm Business Tenancy) should not need an EPC.  However where that property is sub-let on an AST (where the FBT allows it), an EPC must be obtained by the FBT tenant and must have a minimum rating of E.

Where a tenant has been in the property since before 1^st October 2008 there is no requirement for the property to have an EPC.

Most assured tenancies and AHA (Agricultural Holdings Act) tenancies will fall into this category.  However when successors take over these tenancies then the obligation to have an EPC will be triggered.

If a building is exempt from requiring an EPC then it does fall within the scope of the new regulations.  An example would include a holiday cottage which is let for less than 4 months a year or a property is occupied for less than 4 months in a year.

Properties providing accommodation for individual farm workers will constitute HMOs. These do not require an EPC – as there will be multiple tenants on different contracts – some of whom are provided with accommodation as part of their employment.

HMOs do not require an EPC for each room but the property itself is likely to require an EPC.  The physical condition of HMOs are subject to other regulations as well.

Residential properties with an agricultural tie will still require an EPC unless an exemption is registered.

Lettings that fall outside the category of assured tenancies – for instance corporate lets and tenancies where the rent is above the current £100,000 threshold – do not require an EPC.  This is an anomaly and the majority of letting agents would obtain an EPC for such properties as a matter of course.

Consent from the tenant must be obtained before entering to do any work.  Where a landlord fails to get that consent following its reasonable efforts to do so, the landlord may apply for an exemption.

Likewise if the landlord is not able to obtain the requisite consent from a third party such as a superior landlord or a lender.  Being unable to obtain listed building consent or planning permission for the improvements might also mean that the property qualifying for an exemption.

Exemptions

All exemptions must be applied for and registered on the National Private Rented Sector (PRS) Exemptions Register and must be accompanied by appropriate supporting documents.  The exemption lasts for five years after which the landlord is required to try to improve the EPC rating or apply for a further exemption.

The benefit of an exemption will not apply to a purchaser of the property.  The new owner will need to carry out the necessary works and apply for its own exemption if it is unable to do so.

Other registrable exemptions include wall insulation exemptions where the only improvements required to improve a rating is the installation of cavity, external or internal wall insulation and where such installation would negatively impact on the fabric or structure of the building.

An application for an exemption should also be made where improvements have been carried out to a property up to the £3,500 cap and yet the rating remains below E or where no requisite improvement can be made because the cost of that improvement will exceed the £3,500 cap.

There is also an exemption where the relevant improvements would devalue the property by more than 5%.

Listing buildings

From January 2013 there has been an “exemption” for listed buildings from having an EPC. This is qualified as it states “insofar as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance”.   The qualification covers works that might be carried out to the property to improve its energy performance.

Clearly the installation of double glazing would unacceptably alter the character and appearance of a listed building but installing a more energy efficient boiler would not.  A good measure is whether listed building consent would be required for the works.

If the listed building already has an EPC – whether or not obtained before January 2013 – then the property will be within the scope of the regulations.  If that EPC has a G or F rating then some improvements will be required so that it achieves a rating of E or above even though the property is listed.  However the landlord may be able to apply for another exemption.

Properties located in conservation areas or in national parks are NOT automatically exempt from the need to have an EPC.

MEES Regulations are enforced by the local authority who have a range of powers to check and ensure compliance.    A landlord may be served with a compliance notice and may also receive a penalty.

If you have any queries about this topic, please contact Rosie McCormick Paice, or any member of the Residential Property team.

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