A few weeks ago we published an article on the new Minimum Energy Efficiency Standards (MEES). The new MEES regulations mean that, as of the 1 April 2023, a landlord of a “sub-standard” (EPC rating of F or G) non-domestic private rented property, must not grant a new tenancy or continue to let the property, unless an exemption applies.
Landlords should also be aware that some properties are not covered by the regulations, such as properties which aren’t required to have an EPC.
Significant penalties apply to landlords who are not in compliance – therefore, landlords who may be letting a “sub-standard” non-domestic, private rented property need to be aware of the exemptions in case they need to rely on one.
In fact a landlord cannot automatically rely on an exemption – they need to register the exemption in advance on the ‘Private Rented Sector Exemptions Register’.
What are the exemptions?
The exemptions are:
- Third-party consent refused: if the consent of a third party (such as a tenant or a local planning authority) is required to carry out works to improve the minimum level of energy efficiency of the building but is refused
- Improvement would devalue or damage the property: if an independent surveyor reports to the landlord that the improvements would result in a devaluation of the property by 5% or more or that the works would damage the property
- EPC rating “substandard” following works: if all cost-effective improvements have been carried out but this still does not result in an EPC rating of E or higher or there are no such improvements that could be carried out but the EPC rating remains substandard
- Improvement costs will not be recouped within seven years: under the ‘seven-year rule’ if it can be shown that the improvements would not pay for themselves through energy savings within a seven-year period (starting from the date of installation of the improvement) where the landlord has obtained three quotes for the cost of purchasing and installing the improvements
- Wall insulation not appropriate: where the landlord has obtained written expert advice indicating that cavity/external/internal wall insulation would improve the minimum level of energy efficiency of the building but it is not appropriate for the property due to its potential negative impact on the fabric or structure of the property
- Temporary exemption where a person has recently become a landlord: there are some limited circumstances where a landlord will have a temporary exemption of 6 months from the date when they become a landlord including when a person purchases a property which was let on an existing tenancy
Prior to purchasing a non-domestic rented property which is, or may be deemed, “sub-standard” buyers should take great care to consider whether the property can qualify for one of the above exemptions.
How does a landlord register an exemption?
The PRS Exemptions Register is a digital service which allows landlords (or an agent acting on their behalf) to register valid exemptions from the MEES requirements. Landlords (or their agents) will need to register an account.
Exemptions are registered on a self-certification basis, and registration of an exemption does not attract a fee or charge. Exemptions are valid from their date of registration.
Existing landlords who are concerned about the impact of the new MEES regulations should consider these exceptions carefully and, where necessary, obtain expert advice to ensure that they are complying with the law and protecting their interests.
Our Commercial Property Team regularly provides advice to Landlords on the potential impacts of the latest legal developments in Property Law. If you would like to contact a member of the team, you can email us or call us at either our Luton Office 01582 731161 or at our St Albans Office 01727 845245.