Domestic landlords must pay £3,500 per property to improve energy efficiency

In addition to removing the 'no cost' exemption for landlords of domestic properties, the 2019 Amendment Regulations clarified the position in relation to the consent exemption for lettings of both domestic and non-domestic properties.

What was the position until 1 April 2019?

Up to 1 April 2019, landlords of domestic properties did not have to spend anything on energy efficiency improvements. The MEES Regulations were drafted to enable the landlord of a sub-standard domestic property to lawfully let that property if all relevant energy efficiency improvements had been undertaken, or if there were none that could be made. Works only came within the definition of relevant energy efficiency improvement if they could be wholly financed at no cost to the landlord. This exemption was commonly referred to as the 'no cost' exemption.

What changed on 1 April 2019?

The 2019 Amendment Regulations introduce a 'cost cap' of £3,500. 

Since 1 April 2019, where improvements cannot be wholly financed by third party funding, a landlord has only been able to lawfully let a domestic property with an EPC rating of below E (known as a sub-standard property) if it has spent up to £3,500 on carrying out improvement works.

Is the cost of energy efficiency improvement works carried out before April 2019 taken into account?

The 2019 Amendment Regulations provide that the following will be deducted from the £3,500 cost cap:

• The total sum (including value added tax) spent by the landlord on unregistered energy efficiency improvements made between 1 October 2017 and 31 March 2019; and
• The total cost (including value added tax) of unregistered energy efficiency improvements made to the property on or after 1 April 2019.

Improvement works will be 'unregistered' if they are not identified on the PRS Exemptions Register. 

How was the consent exemption amended?

Prior to the 2019 Amendment Regulations, the MEES Regulations provide that, where a tenant's refusal of consent prevented the landlord from carrying out energy efficiency works, the exemption (if registered) lasted for five years. However, the accompanying government guidance stated that the exemption would expire earlier if that tenancy came to an end before the end of the five year period. Whilst this had been discussed in the run up to the publication of the MEES Regulations, the provision did not seem to make it into the MEES Regulations themselves.

This point was clarified by the 2019 Amendment Regulations – the landlord can no longer rely on the exemption once that tenancy has come to an end.

Landlords need to know their obligations under the MEES Regulations. Breach of the Regulations can lead to hefty and fines and reputational damage. TLT has extensive experience in advising on all aspects of the MEES Regulations. If you want to discuss your obligations, please get in touch.

Contributor: Alexandra Holsgrove Jones