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MEES : when you miss the crucial “E” rating

MEES : when you miss the crucial “E” rating

Published: 26 April 2019

MEES Regulations have been a reality for landlords since 1 April 2018. Whilst they set minimum EPC ratings they also allowed landlords to claim exemptions, but do you know what they are and did you know you have to register them for them to apply? No? Here’s what you need to know.

MEES : when you miss the crucial “E” rating

Most private landlords know about MEES Regulations and know that their property must have a minimum EPC rating of “E” before they can grant or renew a lease of it.

Many also know that from 1 April 2020 and 1 April 2023 (for residential and commercial property respectively) this minimum rating will be required for all property that continues to be let after those dates.

Landlords are also likely to know that the Regs provided for exemptions to the rules. What they might not know is that exemptions (i) need to be registered, or (ii) are valid for 5 years only in some cases.

So, what are the exemptions and when and where do they need to be registered? The most commonly used exemptions are as follows.

Exemptions

  • Cost-effective Improvements

Applies only to residential property. When all the cost-effective energy efficiency improvements that can be made have been made but the property remains “sub-standard” (using the wording

of the Regs). Here “cost-effective” means the total cost of improvements by the landlord, capped at a total spend of £3,500.

  • High Cost Exemptions

Applies where the cost of the cheapest recommended improvement exceeds £3,500. This exemption is valid for a maximum of 5 years from its registration and will need to be reviewed.

  • Third Party Consent not Obtained

Applies where the landlord needs the prior consent of a third party, such as a tenant, superior landlord, mortgagee or planning to improvement works and that party refuses to give their consent to the works or consent is given subject to unreasonable conditions.

  • Property Devaluation

Applies where making the required energy efficiency improvements would reduce the property’s value by more than 5%. An independent RICS surveyor is required to provide a statement in support of this exemption.

  • Cost-effective Improvements (Commercial)

Applies only to commercial property. When all the cost-effective energy efficiency improvements that can be made have been made but the property remains “sub-standard” (in the words of the Regs). Here “cost-effective” means that improvements have paid for themselves within a period of seven years on the basis of a formula set out in the Regs.

Registering Exemptions

Remember for exemptions to apply they must be registered before a lease is granted or, in the case of the 2020 and 2023 deadlines dates, before the relevant deadline if the property concerned will continue to be let by the landlord on that date.

Landlords (or their agents) must be registered to be able to submit an exemption notice. Once registered they can submit exemption information.

All submissions must contain the following basic information:

  • The property address;
  • A copy of a valid EPC for the property; and
  • The type of exemption being registered.

Most submissions will also require supporting documentation evidencing the exemption being applied for.

The online exemptions register can be found at https://prsregister.beis.gov.uk.

A Word of Caution

It is worth remembering the register is public and information submitted is therefore available to anyone. Before rushing to find an exemption that can be legitimately applied to avoid capital outlay on improvement works it is worth taking a few minutes to consider the impact your properties appearing on such a register could have on your reputation as a responsible landlord.

N.B. The above is only a very brief overview of the MEES Regs and exemptions as at April 2019. Full detailed information of all the requirements, exempt properties and exempt criteria can be found on the Department for Business, Energy & Industrial Strategy website. Follow the external link to this below:

https://www.gov.uk/government/publications/the-private-rented-property-minimum-standard-landlord-guidance-documents.

Jane Hamilton | Senior Associate | Commercial Property

For further advice, or to discuss your case, please contact Jane Hamilton at jane@fletcherday.co.uk or on 020 7870 3851.

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The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.