In our July issue we looked at how the new energy efficiency standards – known as "MEES" – will affect commercial property. In this issue, we now consider their effect on residential properties.
Three important dates
Since 1 April 2016, most individual tenants occupying residential properties as a main residence with an annual rent under £100,000 (a qualifying tenancy) have been entitled, despite any bar in the terms of their lease, to ask the landlord for consent to make energy efficiency improvements to the property. The landlord has limited grounds for refusal and is not required to contribute to the cost of these improvements. The regulations set out a strict notice procedure to be followed.
From 1 April 2018, if a residential property is required to have an energy performance certificate (EPC) it will be unlawful to let that property on a qualifying tenancy unless the property has an energy efficiency rating of E or above. Breach of this rule could mean civil fines of up to £5,000 and being named and shamed in a breaches register.
The monetary cost seems low, but entry on the breaches register could affect the suitability of the landlord as a 'fit and proper' person for the purposes of obtaining a licence for an HMO (house in multiple occupation).
After 1 April 2020 it will be unlawful for a residential tenancy to continue unless the property is E rated or above. Where a property is F or G rated, the existing tenancy will still remain fully effective between the parties; but the landlord will be under an obligation to bring the property up to standard or risk being fined, named and shamed.
Exemptions and loopholes
Various exemptions are available which, if claimed, must be noted on the exemptions register by the landlord to be effective. These include a 5-year exemption where the tenant refuses to allow the landlord to carry out the improvements necessary to bring the property up to standard, or a 6-month exemption following the purchase of a pre-let sub-standard property.
Although a house needs an EPC before it is let as a whole, an individual bedsit with shared facilities (e.g. kitchen/bathroom) does not. Therefore the minimum energy efficiency requirements will not apply to a multi-let property. However, the tenants would still benefit from the right to request energy efficiency improvements.