Changes to MEES – A new minimum level of spend for domestic landlords

In December 2017, the Department for Business, Energy & Industrial Strategy (BEIS) announced a public consultation on proposals to amend the Minimum Energy Efficiency Regulations (MEES).

View the Domestic Private Rented Sector minimum level of energy efficiency consultation

The amended regulations are intended to help tenants living in the coldest privately rented homes in England and Wales. Landlords with the least energy efficient properties will be required to install energy efficiency measures to improve the comfort for tenants, whilst saving billpayers an estimated £180 a year in energy costs.

Changes to MEES – A new minimum level of spend for domestic landlords

On 5th November, the amended document was released – view the BEIS Press Release here. It outlines changes to the MEES Regulations, including introducing a minimum spending contribution for landlords, as well as other consequential amendments.

Changes to MEES – What are the key points?

  • During 2019, properties with an EPC of F or G must be made warmer (more energy efficient) by landlords before they are let to new tenants. This is expected to cost £1,200 on average and will affect 290,000 properties (6% of the overall domestic market).
  • Where a property cannot be improved to a band E for £3,500 or less, a landlord would be required to submit three independent installer quotes.
  • An estimated 200,000 landlords will be affected; some of whom will still have access to a variety of funding schemes. As a result of these amendments, access to funding has changed. More details relating to funding can be found below.
  • It’s important to note that the new minimum spend requirement may alter some of the older existing exemptions that landlords currently have in place.

Here is the full list of amendments and explanations in detail:

1. Introduce a landlord financial contribution amendment with the landlord contribution

capped at £3,500 and inclusive of VAT.

This will take effect where third-party funding is unavailable or insufficient to cover the costs of energy efficiency improvements. This decision has been made in recognition of the current constraints on third-party funding and their impact on the effectiveness of the current regulations.

The Government believes that introducing a landlord funding contribution element is reasonable, while still permitting landlords to make use of any available third-party funding. Its introduction will ensure that landlords of EPC F and G rated properties make improvements to these properties to raise them to EPC E, or as close as is practicable, regardless of the funding landscape.

2. Any investment in energy efficiency made since October 2017 to be counted within the cap.

Where a property is below EPC band E after the commencement date, the landlord will need to consider whether any energy efficiency improvements have been made to the property since October 2017. Where no improvements have been made since this date, the landlord will need to make improvements to the property up to a value of the £3,500 cap (unless a valid exemption applies).

In instances where energy efficiency improvements have been made since October 2017, the landlord may subtract the cost of these previous energy efficiency improvements from the £3,500 limit to determine the value of the additional energy efficiency improvements they will be required to make.

3. Any available third-party funding, including Green Deal finance and local authority grant funding, to be counted within the cap.

Where part funding can be obtained, landlords will only be required to make up the amount, up to the value of the cap, to bring the property up to EPC Band E, or as near as technically feasible. Also, those landlords who wish to spend more than the cap, can do so on their own accord.

However, ECO funding is restricted for the private rented sector. Under the ECO3 scheme, landlords of EPC F and G rated properties will only be able to access ECO funding for higher value measures, such as solid wall insulation or renewables measures. As these measures will likely exceed the value of the £3,500 cost cap, the issue of whether to include ECO funding within the level of the cap is no longer directly relevant.

4. Establish a new ‘high cost’ exemption to be available where a substandard property cannot be improved to E for £3,500 or less, and require the submission of three installer quotes where a landlord is registering such a ‘high cost’ exemption.

Where a landlord wishes to rely on a ‘high-cost’ exemption, they are required to upload copies of three quotations from different installers to the PRS Exemptions Register. These must show that the cost of the recommended improvement exceeds the cap. This proposal mirrors a similar requirement established in the non-domestic provisions and is designed to discourage landlords from registering false ‘high-cost’ exemptions.

Please be aware, when investigating improvement works, landlords and other property owners and agents may use any tradesperson they wish. However, when selecting installers to quote for and undertake energy efficiency works, they may wish to search for those with the TrustMark certification only; a Government endorsed quality scheme for ‘find a tradesperson’.

5. Remove the current ‘no cost to the landlord’ provision, and curtail existing ‘no cost’ exemptions so that they will end on a planned date of April 2020.

All landlords who have registered ‘no cost’ exemptions will be contacted personally via the Exemptions Register to alert them in good time to the adjusted exemption length. In addition, the PRS Exemptions Register will be updated so that all ‘no cost’ exemptions are automatically cancelled on 31 March 2020, and the landlord alerted of this electronically.

6. Remove the consent exemption currently available under Regulation 31(1)(a)(ii) where a tenant has withheld consent to a Green Deal finance plan.

In cases where a landlord has secured Green Deal finance, but a sitting tenant withholds their consent to the plan, the landlord will be unable to claim an exemption on that ‘consent withheld’ basis. The landlord must then seek alternative means of financing the required improvements, including making a financial contribution themselves.

  • Upon enactment, the amended regulations will apply upon the granting of:
  • a new tenancy to a new tenant, and
  • a new tenancy to an existing tenant.
  • From 2020, the amended regulations will apply to all privately rented property in scope of the regulations, in line with the existing regulatory ‘backstop’ date.

Timescales for MEES Amendment

The Government intends the amended regulations to come into force during 2019, subject to parliamentary approval. This will include an official published guidance to help landlords, tenants, local authorities and wider sector bodies understand and prepare for the amended regulations before they apply.

In line with ‘Better regulation framework: interim guidance’, the Government has put in place a requirement to review the operation and effect of the 2015 regulations at no less than five yearly intervals. This duty to review will also apply to the amended regulations.

Want to know more about the changes to MEES?

Stroma Certification believe that landlords who have not already acted should begin the process now prior to any of their building stock becoming vacant and unable to let. Energy assessors and installers can help clients by ensuring their up to date with the latest changes to the regulations.

Need more info?... Keep an eye out for our CPDs in January 2019. If you’d like to get involved with MEES, take a look at our Domestic MEES training.

For advice, please get in touch with our team on 01977 665 420 (EXT 614).

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