Are you ready for some MEES time? It would be as well, because by the 1st of April 2018 you might be committing a criminal offence if you have failed to prepare for it.
What is it?
MEES stands for new Minimum Energy Efficiency Standard regulations and are the way in which the government is looking to beef up the existing system of Energy Performance Certificates (EPCs), in order to bring non-domestic property up to wider European standards. The new regulations are underpinned by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.
They are aimed at tackling the poorest performing buildings under the current system of Energy Performance Certificates – those which have been rated less than “E”, namely “F” or “G”.
MEES are to be implemented in two stages:
- with effect from the 1st of April 2018, landlords of non-domestic let property must not let or lease the premises to new or existing tenants if the EPC of the building is rated at less than “E”; and
- from the 1st of April 2023, landlords of such property must not continue to let or lease it to tenants if the EPC is still rated at less than “E”.
The pressure is clearly on landlords, therefore, to upgrade the energy efficiency of the non-domestic buildings they let.
Weights and Measures Authorities departments of your local authority are responsible for enforcing the new regulations and have powers to inspect your property to determine whether it has been let in breach of the rules.
If a breach is discovered, inspecting authorities may issue an enforcement notice, and if action is still not taken, financial penalties may follow.
The amount of the penalty depends on the length of time for which the property has been let since the issue of a penalty notice. If is three months or less, for example, the maximum penalty is up to £50,000 (for each property owned by the landlord which is in breach of the notice).
If you are in breach of the regulations for longer than three months, have given false or misleading information to the inspectorate and failed to comply with a compliance notice, you might be issued with a penalty of up to £150,000.
Clearly, the intention of MEES is to encourage landlords to invest in upgrading the energy efficiency of the buildings they let. As solicitors Field Seymour Parkes point out, however, there are some exemptions:
- the principal grounds for exemption are that, due to the nature and construction of the premises, it is unduly expensive to carry out the necessary upgrade – if the works do not pay for themselves through energy efficiency savings within a period of 7 years;
- if a third party – including your own tenants or leaseholders – have refused their consent to the works and so prevented your carrying them out, an exemption may be granted;
- if the works involved in the necessary upgrade result in a reduction of the property’s capital or rental value by more than 5%, exemptions may also be granted; and
- landlords who are contractually obliged to let the accommodation – even though it does not achieve MEES standards – may also be exempt.
Preparing yourself for MEES, by reviewing the current EPC rating of your property and carrying out any necessary upgrade in time for the respective deadlines of 2018 and 2023, therefore, may save you money in the longer-term and help protect the future of your buy to let business.