Energy Performance Certificate’s (EPC) & Rental Properties in the UK
Marketing a property for sale or let in the UK requires a vendor or landlord to provide a valid Energy Performance Certificate - commonly known as an EPC.
What is an EPC?
An EPC provides information about the energy usage of your property and expected typical energy costs as well as recommendations for how to improve the energy efficiency of your property. The certification process must be completed by an accredited assessor who will complete a thorough visual inspection of the property before giving it a rating from A (most efficient) to G (least efficient).
How long is an EPC valid?
Currently, an EPC is valid for 10 years from the date it is completed.
What is the minimum energy efficiency standard (MEES) & how does it affect Landlords?
The minimum energy efficiency standard (MEES) was introduced in March 2015 by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. The MEES Regulations originate from the Energy Act 2011 which contained the previous coalition government's package of energy efficiency policies including the Green Deal.
From 1 April 2018, landlords with properties in England and Wales within the scope of the MEES Regulations must not renew existing tenancies or grant new tenancies if the property has less than the minimum energy performance certificate (EPC) rating of E unless the landlord registers an exemption.
After 1 April 2023, landlords must not continue to let any buildings which have an EPC rating of less than E unless the landlord registers an exemption.
MEES Legislation Residential Property Exemptions
The MEES legislation affects most private rented properties in England and Wales; however there are some excluded buildings which include: listed buildings or other officially protected properties, buildings that are occupied for under 4 months of the year, temporary buildings used for less than 2 years, and buildings with a usable surface area of less than 50 sq. m.
Further to these excluded buildings, there are some exemptions that may apply to your property. These exemptions permit properties to remain below the minimum E rated EPC if:
- The landlord is not provided the consent of the occupying tenant or a contractually required third party’s consent to carry out any improvements.
- The required changes would result in a devaluation of over 5% of the property value
- The cost-effective improvements have already been undertaken and failed to suitably increase the rating.
- The landlord is unable to carry out the cost-effective changes, as a result of failing the credit check needed for Green Deal finance.
- Specifically relating to wall insulation, if this measure is advised against by an independent installer, because it could impact the structure of the property.
If one or more of these exemptions applies to your property, you are required to notify the PRS Exemptions Register, a government operated service in order to ensure application for an ‘exemption’ can be evidenced. Failure to notify the Exemptions Register will result in the exemption being deemed invalid and the landlord can be fined for non-compliance.
Landlord MEES Penalties & Fines
Local authorities enforce the new regulations, and if they deem a landlords property to be non-compliant they can serve a compliance notice. If the evidence provided following this compliance notice is insufficient, the local authority may then issue a penalty notice of up to a maximum of £150,000.
The penalty for renting out a residential 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, this 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 as between the landlord and the tenant remains valid and in force.