April Fool’s Day saw the introduction of MEES. Where a property cannot be let or a lease cannot be renewed if the property has an EPC rating of F or G. The onus of this falls solely on the Landlord, who will have to bear the costs of the works.
There are exemptions available, these exemptions are valid for five years and cannot be transferred to a new landlord: –
- The ‘Golden Rule’ which is that if the works cannot be recovered from the energy savings within 7 (seven) years.
- If the energy efficiency improvements that need to be made to the property will see its Market Value reduce more than 5%.
- If a Tenant, Superior Landlord or Planning Authority refuse to grant their consent to the works being undertaken.
The penalty for renting out a property for a period of fewer than three months in breach of the MEES Regulations will be equivalent to 10% of the property’s rateable value, subject to a minimum penalty of £5,000 and a maximum of £50,000. After three months, the penalty rises to 20% of the rateable value, with a minimum penalty of £10,000 and a maximum of £150,000.
Where a property is let in breach of the MEES Regulations or where a penalty is imposed, the lease between the Landlord and the Tenant remains valid and in force.
We anticipate that MEES will influence the market, potentially seeing an adjustment in rental levels to reflect a ‘compliant and non-compliant’ property. Particularly when it comes to Rent Reviews, the assumption of an ‘open market letting’ would have to reflect the works a Landlord would have to do to re-let an F rated property, which would have to be factored into the negotiation.
With the minimum level increasing to E on 1st April 2023, a D rating in April 2025 and finally a C rating in April 2030, this is something that Landlords will have to become increasingly aware of their liability. We recommend Landlords seek professional advice and contact Vickery Holman who are ready to assist you and ensure that your property is ‘future proofed’.
