LANDLORDS IN CARDIFF, SWANSEA, NEWPORT AND THROUGHOUT SOUTH WALES.
Minimum Energy Efficiency Standards (MEES), Home Insulation Assessments & Energy Performance Certificates (EPC).
ARE YOUR RENTALS MEES READY?
On 1/4/18 the Minimum Energy Efficiency Standards (MEES) for Privately Rented Domestic Properties came into force. This requires privately rented homes to have an EPC with a minimum band rating of an E.
Are you concerned about the changes to energy efficiency regulations affecting your domestic rental properties?
We may be able to help you. Owing to some major updates to the datasets used within the EPC software, the answer may be nothing more than just an updated EPC.
We also arrange Eco Grants for installing energy efficiency improvements. Loft & Cavity Wall Insulation, External & Internal Wall Insulation and Solar Panels to name few. All of which would improve the EPC rating.
Why were the MEES Regulations introduced?
The regulations were made to improve the energy efficiency of privately rented homes. This is good for the tenant and helps to meet UK targets of Carbon emission reductions under the Energy Act 2011, and to achieve net Zero Carbon Emissions by 2050.
This is somewhat strange, since EPC’s are a measure of the cost to light, heat and supply hot water in a property. It is not a measure of the Carbon Emissions of a property.
What are the MEES Regulations?
The Energy Efficiency (Private Rented Property (England & Wales)) Regulations 2015, are often referred to as MEES (Minimum Energy Efficiency Standards) . It is unlawful to let out domestic properties which have an EPC rating of F or G.
Who does MEES affect and when?
On 1st April 2018, the regulations applied to landlords/property owners upon granting a lease to a new tenant. It also applied to lease renewals to an existing tenant.
The regulations apply to all privately rented properties within the scope of the regulations since 1st April 2020.
In order to comply, all properties must meet MEES by undertaking permissible, appropriate and cost-effective improvements, unless exempt.
Properties which are let on tenancies of more than 99 years, or less than 6 months, and some regulated tenancies such as housing associations were excluded.
What are the proposed changes to MEES?
It was proposed to increase the minimum EPC rating for a privately rented property from an E to a C. However, this has been shelved for the time being.
EPC’s will change over the next 12 months or so, and so will MEES
The Government are discussing some potential changes to EPC’s and their usage.
EPC’s used to show 2 “graphs” The current rating (based on fuel cost of running the property) and Environmental Impact rating (based on Carbon Emissions). It is proposed that this should be the case again. It’s possible that this will have an impact on MEES.
There has been talk for some years to reduce the life of an EPC. Proposals are being looked at where an EPC with a rating of A, B & C would be good for 10 years, but only 5 years for D, E, F & G rated properties.
There are 2 sets of energy efficiency regulations, one for privately rented properties and the other for Social Housing. There is a desire to combine them into 1 piece of legislation, and that seems to be logical. However, that would leave one sector of housing with no legislation – the private homeowner.
It is being discussed as to whether some energy efficiency regulations are required for privately owns homes. Maybe a house could not be sold below a certain EPC banding?
And it has long been talked about linking EPC bandings to Council Tax. The lower the EPC rating – the higher the Council Tax.
Whichever way we cut it – EPC’s will play a greater role in our lives in the future, someway or another!
What is the cheapest way to increase the energy rating of my property?
We get asked this question quite often.
The way I look at it is, “what is the cost per point increase”?
If your tenant can qualify for an Eco grant, then any increase in the EPC rating would be free.
However, if they don’t and you’ve got to pay for it here are some examples. The exact increases will depend on the fuel that is used in the property. Electrically heated properties will see bigger increases in the EPC rating than Gas. But since more homes are heated by Gas the figures below are based on Gas in a semi detached house.
It depends how many points you want/need to increase your rating by. Your current EPC might be D56 so you would need 13 to hit a C rating, but if your current EPC is D66 you would only need 3 to hit a C rating.
External Wall Insulation – this could increase the rating by 15 points. However, it is expensive and could cost as much as £15,000 – that’s £1,000 per point. If you want to find out more about this give us a call on 0800 8 10 10 60.
Loft Insulation – most properties already have some insulation in the loft. Increasing the loft insulation from 100mm to 300mm could increase the rating by 5 points and cost about £650 – that’s £130 per point. No good if you need 6 points. If you want to find out more about this give us a call on 0800 8 10 10 60.
Solar Panels – okay not suitable for all properties. Hipped Roofs for example. Orientation – in reality as long as a suitable roof is facing the South side of East and West, it works.
A 2.5kw system, the EPC default position, would increase the EPC by 8 to 12 points and cost about £2,500 – £3,000 to install. That’s between £200 and £375 per point. If you want to find out more about this give us a call on 0800 8 10 10 60.
Solar Panels also reduce carbon emissions, and will generate a small income for you from the SEG ( todays equivalent to the old feed-in-tariff (FIT), but at a fraction of the FIT). It also reduces your tenant’s electricity bills.
What are the Penalties for non-compliance with MEES?
Fines of up to £5,000 can be enforced, depending on the type of infringement and the length of non-compliance. It is proposed that this will be increased to £30,000 from 2026. Local Authorities will be, and appear to be, monitoring compliance. Tenants can raise a case with the First-Tier General Regulatory Chamber if they feel a landlord is non-compliant.
Are there any MEES exemptions?
The “no cost” exemption was removed on 1/4/20
On 31/3/20 all “no cost” exemptions were deleted from the Exemption Register.
However, there are various exemptions that can apply to the prohibition on letting a property with an energy efficiency rating below E.
If your property meets the criteria for any of the exemptions, you will be able to let it once you have registered the exemption on the PRS Exemptions Register.
Here is the list of qualifying exemptions.
- “All relevant improvements made” exemption. Register this exemption if the property is still below EPC E rating after improvements have been made up to the cost cap £3,500 inc VAT., or there are none that can be made. This exemption lasts 5 years. After that it will expire and you must try again to improve the property’s EPC rating to E. If it is still not possible, you may register a further exemption.
- ‘High cost’ exemption. Register this exemption if no improvement can be made because the cost of installing even the cheapest recommended measure would exceed £3,500 including VAT. This exemption lasts 5 years. After that it will expire and you must try again to improve the property’s EPC rating to E. If it is still not possible, you may register a further exemption. To register this exemption, you need to provide this additional information:
- 3 quotes from qualified installers for purchasing and installing the cheapest recommended measure, demonstrating that the cost would exceed £3,500 including VAT
- written confirmation that you are satisfied that the measure exceeds £3,500 including VAT
- Wall insulation exemption. Register this exemption if the only relevant improvements for your property are:
- cavity wall insulationexternal wall insulationor internal wall insulation (for external walls)
- a copy of the written opinion of a relevant expert stating that the property cannot be improved to an EPC E because a recommended wall insulation measure would have a negative impact on the property (or the building of which it is part)
- Third-party consent exemption. Register this exemption if the relevant improvements for your property need consent from another party, such as a tenant, superior landlord, mortgagee, freeholder or planning department, and despite your best efforts that consent cannot be obtained, or is given subject to conditions you could not reasonably comply with.This exemption lasts:
- 5 yearsor, where lack of tenant consent was the issue, until the current tenancy ends or is assigned to a new tenant
- copies of any correspondence and/or relevant documentation (such as a letter from your tenant, or a planning department decision notification) demonstrating that consent for the recommended measure was required and sought, and that this consent was refused, or was granted subject to a condition that you were not reasonably able to comply with
- Property devaluation exemption. Register this exemption if you have evidence showing that making energy efficiency improvements to your property would devalue it by more than 5%. In order to register this exemption you will need a report from an independent surveyor. This surveyor needs:
- to be on the Royal Institute of Chartered Surveyors (RICS) register of valuersto advise that the installation of the relevant improvement measures would reduce the market value of the property, or the building it forms part of, by more than 5%
- a copy of the report prepared by an independent RICS surveyor that provides evidence that the installation of the recommended measures would devalue to property by more than 5%
- Temporary exemption due to recently becoming a landlord. If you have recently become a landlord under certain circumstances (see section 4.1.6 in Chapter 4 of the full Guidance document for details of those circumstances) you will not be expected to take immediate action to improve your property to EPC E. You may claim a 6 months exemption from the date you became a landlord. This exemption lasts 6 months from the date you became the landlord. After that it will expire and you must have either:
- improved the property to EPC E ( Proposed to increase to a C )or registered another valid exemption, if one applies
- the date on which you became the landlord for the property
- the circumstances under which you became the landlord
The Government has opened (May 2022) a new grant, it is aimed at Air Source Heat Pumps.
The grant is called the Boiler Upgrade Scheme (BUS). The Government is giving £7,500 grants towards Air Source Heat Pumps (ASHP) and Biomass Boilers. The cost of having an ASHP installed is about £13,000, so you would need to make a contribution of about £5,500. But this will not be an answer to satisfying the MEES. It will however, reduce the property’s Carbon Emissions,
An Air Source Heat Pump will not improve your EPC! In fact, with the exception of electric or LPG (bottles) heating, the EPC rating will DROP. If the existing heating is on Mains Gas then the rating will drop considerably. Here is an example of 2 draft EPC’s – one with a gas boiler and one with ASHP
Why does the ECP rating go down when you install an Air Source Heat Pump?
It’s all to do with the software and database. Now, just bare with me …
An EPC is the measure of the COST of heating, lighting and supplying hot water in a property – it has nothing to do with Carbon Emissions
An EPC uses an “algorithm” to arrive at a “value”. This will be based on wall type, loft and wall insulation, windows, volume of property and so on.
The “value” is known as the “primary energy use”.
Primary energy use is a measure of the energy required for lighting, heating and hot water in a property. The calculation also includes:
- the efficiency of the property’s heating system
- power station efficiency for electricity
- the energy used to produce the fuel and deliver it to the property
The resultant figure is then multiplied by the cost per kWh of the fuel that is heating the property. The cheapest is gas, and electricity is the most expensive. Hence electrically heated properties tend to be E, F & G rated.
Now, this is where the problem arises. The EPC does not recognise Air Source Heat Pumps (ASHP). The heat generated by an ASHP comes from the “fresh air”. In fact an ASHP can extract heat from the air at minus 20 degrees Celsius.
But “fresh air” is not a fuel listed in the EPC database. ASHP’s run on electricity, so the EPC decides that the fuel is electricity. And as mentioned above, electricity is the most expensive fuel per kWh.
So, apart from properties that are already heated by electricity, the EPC rating will drop when an ASHP is installed. Hopefully, the powers to be will find a solution
Interestingly, the gap between the cost/kwh for gas and electricity has narrowed.
Gas prices have significantly increased due to the situation in Russia and Ukraine (May 2022). Electricity prices were reducing owing to the increased percentage of renewable electricity generation.
However, owing to the large amount of electricity (40%) still being produced from gas fired generators and the increased price of gas, the price of electricity has also increased, but not by as much as gas.
Over time, this narrowing of fuel prices will have an effect on EPC ratings.
What Government Grants are available to me?
If you have properties heated by Electricity or Coal, you might qualify for a Free Central Heating System – even if the property is rated F or G.
Grants are still available for all the measures covered in this site.
Energy Performance Certificates.
In April 2008 it became law that every privately rented property has to have a current EPC.
EPC’s have a lifespan of 10 years. So, 1,000’s of EPC’s are expiring each month, and have to be renewed.
Some very important updates have been made to the datasets used within the EPC software. These updates could change the energy rating by as much as 5 points, without any changes to the property.
Also, your EPCs maybe a few years old and do not reflect changes already made – such as a boiler upgrade.
It could move a property from an F rating up to an E rating – job done! – just for the cost of a new EPC and good for another 10 years.
However, there is talk that the 10 year life of an EPC could reduce to 5 years. There are suggestions that A, B & C rated properties will have a life span of 10 years, and D, E, F & G rated properties will have a life span of 5 years.
Please feel free to give us a call to discuss any of the content on this page.
Give us a call now on 0800 8 10 10 60 or 07960 799681 and speak to an expert adviser