From 1 April 2020, the letting of properties with an EPC rating below E is prohibited and could result in serious penalties, irrespective of when the lease was entered into – unless an exemption applies or the property falls outside the ambit of the Minimum Energy Efficiency Standard (MEES).

Previously, landlords were prohibited from granting new leases of properties with an EPC rating below E (save for in the exceptions described above). Now, the prohibition has gone further, to cover subsisting leases that commenced before the new MEES standards came into effect on 1 April 2018.

Here is what you need to know:

Do these regulations apply to me?

If your property:

a) is being let on an assured, regulated or domestic agricultural tenancy; and

b) has been advertised for sale or let, or been repaired or altered, in the past 10 years,

then it is very likely that these regulations apply to you.

What improvements do I need to make to my property to improve its energy efficiency rating?

The recommendations section of your EPC report sets out measures for improving your energy efficiency.

How am I expected to fund improvements to my property?

You are not expected to spend more than £3,500 (including VAT) of your own money on improvements. If, after spending that amount, your property is still rated below E, you will be able to register for an exemption. You can include energy efficiency improvements made to your property after 1 October 2017 towards the £3,500 cost cap.

There is third party funding available – you can find more information on that here.

If you secure partial funding of less than £3,500 and your property is still rated below E, you may be expected to bridge the gap to £3,500 with your own money.

What are the exemptions?

  1. You have spent £3,500 on improvements and the property is still rated below E;
  2. There are no improvements that can be made for less than £3,500;
  3. Wall insulation is the only relevant improvement for your property, and you have written expert advice that that would negatively impact your property’s fabric or structure;
  4. You cannot obtain a third party consent that is needed for the improvements, despite best efforts;
  5. The improvements would devalue your property by more than 5%; and
  6. You have only recently become a landlord, and you meet certain criteria.

These exemptions last for five years (save for Point 6 which is a temporary six month exemption). Once expired, they may be renewed if the circumstances still apply. The exemption must be registered here and be accompanied with certain evidence – which can be onerous to gather.

What are the consequences if I do not comply?

Financial penalties are per property and per breach and may be up to £5,000. Penalties may be served in respect of breaches that took place up to 18 months ago.

My property is currently empty. Do I need to do anything?

No – you do not need to take action to improve your property’s rating until you decide to let it again.

What’s next?

It appears standards are only set to increase, with the Government having announced an aim for as many homes as possible to be upgraded to band C by 2030, where practical, cost-effective and affordable.