Penalties warning as changes to energy efficiency standards come into force

Landlords and potential investors need to be aware of imminent changes to energy efficiency standards for properties, which can attract hefty fines if not adhered to.

Changes to Minimum Energy Efficiency Standards (MEES) and Energy Performance Certificate (EPC) requirements, come into force on 1 April.

At the moment, for commercial properties, a tenancy cannot be granted to new or existing tenants if the property has an EPC rating of F or G, unless the property is registered on the Private Rented Sector (PRS) Exemptions Register.

But from 1 April, it will be an offence to continue to let or rent out a property if it does not have a rating of at least E, which will attract a fine.

Some exemptions

Fines range from 10 per cent of the rateable value for breaches of less than three months (minimum £5,000 to a maximum of £50,000) to 20 per cent of the rateable value for breaches over three months (minimum £10,000 to a maximum of £150,000). Additionally, the breach may be made public through entry in the PRS Exemptions Register.

Some exemptions may apply to the minimum E rating requirement, including a seven-year payback test, third-party consent, devaluation, and recently becoming a landlord.

Residential properties

Residential properties should already have the required E rating, but Government proposals mean that by 2025 they must be upgraded to a C rating or higher for any new lettings, and in 2028 it will also apply to any continuing tenancies.

All of this means landlords should start preparing to make sure their properties are up to the required standard by the time of the deadlines.

Not only is there the threat of penalties for non-compliance, but they must consider the costs of upgrading properties and the consequent loss of rental income if they are not up to standard.

Property owners will therefore need to be able to show that the property has an appropriate minimum EPC rating of E in place and that all the relevant energy improvements that can be made have been completed.

For help and advice on related matters, contact us today.