Over the last few years, the Government has been making a concerted effort to improve the energy efficiency of Britain's housing stock.
The benefits of this are twofold. Firstly, increased energy efficiency in homes leads to a lower carbon footprint and a step forward in the fight against climate change.
Secondly, homes which are more energy efficient benefit consumers in the form of lower energy bills and more comfortable living conditions.
One of the Government's key initiatives in this regard is the Minimum Energy Efficiency Standards (MEES), which focuses on the Private Rental Sector (PRS).
MEES, which increases landlords' energy efficiency responsibilities, was first introduced in 2018, further tightened this year and is set to be extended in 2020.
Since MEES was announced, one of the key concerns and points of confusion for landlords has been how the legislation can be applied to listed buildings and properties in conservation areas.
With this in mind, and as MEES reaches its first anniversary, we've put together an update for landlords who let these types of properties.
A MEES recap
Since April 1 2018, it has been illegal for landlords to issue a new tenancy to new or existing tenants if their property has an Energy Performance Certificate (EPC) rating of F- or G-.
At some point this year, the rules are set to be tightened so that any property with an EPC rating of F- or G- will need to be made warmer by landlords before it can be advertised for new tenancies.
On top of this, the Government is set to lift the exemption cap on costs for improvements from £2,500 to £3,500, meaning fewer landlords will be able to register for a MEES exemption relating to improvement costs.
And finally, from April 1 2020, MEES will apply to all privately rented properties in England and Wales, regardless of when the tenancy commenced.
Are listed buildings and properties in conservation areas exempt from MEES?
The simple and not so helpful answer here is: maybe. There has been much criticism of the official MEES guidance and how it relates to an EU Directive (which will still apply after Brexit), leaving landlords in an ambiguous situation in which it is difficult to interpret the rules.
According to the official guidance, an EPC is not required for a listed building or property in a conservation area if energy improvement requirements would ‘unacceptably alter’ the property’s character or appearance. In this case, the property would also then be exempt from MEES and landlords would still be able to let it even with an EPC rating of F- or G-.
The problem that arises here is how can a landlord determine whether EPC requirements would ‘unacceptably alter the character or appearance’ of the property without an EPC in the first place?
The widely advised solution to this problem is to obtain a draft EPC to see what works are recommended and whether they would deem the property exempt from needing an EPC and therefore from MEES too.
The next obstacle is that some recommendations could be unobtrusive, while others could be seen as ‘unacceptable’ alterations. It is in this instance where the landlord has to decide what could or could not be done and the subsequent effect any works would have on the property’s EPC rating.
The key to remember here is that exemptions to EPC rules when it comes to listed buildings and properties in conservation areas are carried out on a case-by-case basis. If a landlord is in doubt as to what can be deemed ‘unacceptable’, the official guidance encourages them to seek the advice of their local planning authority’s conservation officer.
So, the suggested plan of action if you’re letting a listed building or property in a conservation area with an EPC rated E- or above is as follows:
- Commission a draft EPC.
- Determine whether the suggested works entitle you to register for an exemption (with the help of the local authority if required).
- Depending on which route you go down, take the required action of registering for an exemption or carrying out the recommended works to secure an EPC rated E- or above.
As you can see from the above, the guidance is certainly not clear cut and remains open to interpretation.
The penalties for not complying with MEES are substantial and not issuing an EPC at the start of a tenancy (if one is required) could cause problems if you later try to issue a Section 21 eviction notice. With this in mind, if you’re not sure whether your property is eligible to be exempt from requiring an EPC or from MEES, it could be worth your while seeking independent legal advice to ensure you’re covered and take the right course of action.
Image spec notes: Image courtesy of DepositPhotos, size 'medium'