Raising the energy efficiency bar in the PRS

In our November Focus we looked at new Minimum Energy Efficiency Standards (MEES) when letting domestic and commercial premises in England and Wales.

A landlord cannot grant a lease or tenancy of “sub-standard” premises on or after 1st April 2018. Sub-standard domestic properties that are already let must comply from 1st April 2020 and commercial from 1st April 2023. A recent report claims that nearly one-fifth of properties in the private rented sector are sub-standard.

A “sub-standard” property is a property that does not achieve an “E” Energy Efficiency Certificate (EPC) rating or higher. But landlords need to prepare for the fact that this is likely to change - and soon.

The government’s Clean Growth Strategy published towards the end of 2017 proposed a consultation on raising the current “E” minimum standard for the commercial private rented sector.

The bar is also to be raised on the domestic front. Improvements to bring a domestic property to the “E” minimum standard are currently only required if they are at “no cost” to the landlord, for example because government funding is available. However the government is consulting on replacing the “no cost” rule with a capped financial contribution. With a cost cap, domestic landlords would need to invest in improvements to a sub-standard property up to the value of the cap, the recommended cap being £2500 per property.

A response to the consultation is expected in spring 2018, with the cost cap expected to come into force in April 2019.

For further information please contact Sian Skerratt-Williams or your usual contact at Norton Rose Fulbright.