Energy Performance Certificate

An EPC is a compulsory review of how energy efficient a property is.

The EPC lasts for 10 years, but new legislation states that properties can now only be let on a new term or renew on a fixed term if the property’s EPC rating is E or better. From April 2020, landlords will not be allowed properties rated at F or G. Listed buildings are exempt.

Contact us for advice on renewing or improving your EPC rating.

1. Do I Need An Energy Performance Certificate (EPC)?

   Yes. It is a legal requirement to have a valid EPC for a property when marketing for sales and/or lettings. There are exemptions for certain property types, and all exemptions have to be registered on the national register. Each registered exemption is valid for five years.

   In addition, from 1st April 2018 any property let on a new tenancy or a fixed term renewal must meet the new minimum EPC rating of E or higher. As EPCs only last for 10 years and became compulsory in 2008, it is important to check that your EPC is still valid and the rating is E or higher. From 1st April 2020 it will not be possible to let any domestic property that has an EPC rating of F or G. Furthermore, if a landlord wants to back possession of a property let on an Assured Shorthold Tenancy it is legally necessary to have a valid EPC before serving notice on a tenant.

2. What Is An EPC?

   An EPC assesses the energy performance of a property, from “A” representing the most energy efficient property to “G” representing the least energy efficient property. It must be carried out by a qualified Domestic Energy Assessor and will also show a building’s environmental impact by indicating its carbon dioxide emissions. The assessor looks at factors such as the wall, floor and roof insulation, boiler efficiency, and even the type of lightbulbs in use. All EPCs can be found on the national register accessible here.

3. How Long Is An EPC Valid For?

   A valid EPC will last for 10 years and can be used for multiple tenancies within that period so long as the rating is not F or G. This is because from 1st April 2018 any property let on a new tenancy or a fixed term renewal of tenancy must have a minimum EPC rating of E or higher. A new EPC should be arranged for a rental property as soon as an existing certificate expires to maintain a valid EPC at all times.

4. How Do I Order An EPC?

   KeyHomes are able to arrange for an EPC to be carried out on your behalf. The cost of an EPC will be £180 including VAT.

For more information please email EPC@keyhomesestates.com

More information about EPCs

he Minimum Energy Efficiency Standard (MEES) requires commercial and residential properties to have a minimum Energy Performance rating (EPC) of an “E”. This legal requirement is being phased in with the below key dates:

• From April 2018, MEES will apply to all new lets and tenancy renewals.
• From 1st April 2020, it will apply to all residential tenancies required to have an EPC rating.
• From 1st April 2023, it will apply to all existing commercial leases that are required to have an EPC rating.

From these dates, it will be unlawful to rent a property which has an Energy Performance Rating of an “F” or “G’”. The penalty for renting out a property in breach of this Regulation is dependent on the rateable value of the property. The minimum penalty is £5,000 and the maximum is £150,000.

However, there are numerous exceptions and exemptions and there may be some good news for landlords who have properties with solid walls (properties typically built before 1918).

If you are a landlord, freehold investor or developer who needs to find out more about MEES, including if you are excluded or exempt, please contact our Commercial Property team.

• What is the Minimum Energy Efficiency Standard (MEES)?
• What are EPC Ratings?
• What is in Scope for MEES?
• What Buildings are Excluded?
• What are the MEES Exemptions?
• What Improvements are Required?
• What are the Penalties for non-compliance with MEES?
• What is the Impact on Freehold Investors and Developers?

WHAT IS THE MINIMUM ENERGY EFFICIENCY STANDARD (MEES)?

The minimum energy efficiency standard (MEES) was introduced in March 2015 by the Energy Efficiency Regulations. From 1 April 2018, landlords of buildings within the scope of the MEES Regulations must not renew existing tenancies or grant new tenancies if the building has less than the minimum energy performance certificate (EPC) rating of “E”, unless the landlord registers an exemption.

After 1st April 2020, all residential landlords must not continue to let any houses or flats with less than an “E” EPC rating unless the landlord registers an exemption.

After 1 April 2023, all commercial landlords must not continue to let any buildings which have an EPC rating of less than “E” unless the landlord registers an exemption.

WHAT ARE EPC RATINGS?

Energy Performance Certificates (EPCs) are needed whenever a property is:

• Built
• Sold or
• Rented

You must order an EPC for potential buyers and tenants before you market your property to sell or rent.

An EPC is completed by an accredited assessor and contains:

• Information about a property’s energy use and typical energy costs
• Recommendations about how to reduce energy use and save money

An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for 10 years.

WHAT IS IN SCOPE FOR THE MEES?

The MEES applies to residential (houses and flats) and commercial properties in England and Wales.

In the case of flats, this means a self-contained unit. Non-self-contained units, such as bedsits, do not require an individual EPC. If there is no EPC for the building they are in, then they do not need to comply with MEES. However, when the house they are in is sold, it must be given an EPC and the bedsits will then need to comply.

WHAT BUILDINGS ARE EXCLUDED?

There are numerous buildings which are not required to have an EPC and so are excluded from MEES including:

• Tenancies of over 99 years
• Industrial sites and workshops
• Buildings where the EPC is over 10 years old or where there is no EPC
• Listed buildings– the extent of their inclusion is unclear and we advise you to contact us with any questions on these.
• Residential buildings which are intended to be used less than 4 months of the year.
• Temporary buildings with a planned timed use of 2 years or less.
• Stand-alone buildings with a total usable floor area of less than 50 square meters.
• Holiday lets

This is not as straightforward as it seems and we suggest you contact us if you have any questions.

If your building is not excluded, then any property with an EPC rating of an F or G is substandard for letting. If you continue to let such a property then you are liable for a penalty of between £5,000 and £150,000. However, this breach does not affect the validity or legality of the tenancy, so the rent continues to be payable.

However, there are some exemptions to the MEES.

WHAT ARE THE MEES EXEMPTIONS?

There are three possible MEES exemptions:

1. The Green Deal Golden Rule– Under the Golden Rule, there should be no upfront costs (or any net cost to you) in making the required energy efficiency improvements. The savings your improvements generate should repay their cost over their expected lifetime. If the predicted savings are less than the expected costs, then you have a possible exemption.
2. Devaluation– this is where an independent surveyor determines that the relevant energy efficiency improvements that could be made to the property are likely to reduce the market value of the property by more than 5%.
3. Third Party Consent– this applies where consent from persons such as a tenant, a superior landlord or planning authorities has been refused or has been given with conditions with which the landlord cannot reasonably comply.

We highly recommend that you speak to us to see if you are exempt from MEES. If so, then you need to notify the Government operated PRS Exemptions Register. This opens on 1st October 2017.

KeyHomes can help you with this registration. It is important, as if you do not register, then your exemption will be ineffective and amount to non-compliance with the regulations.

We recommend that you contact our Commercial Property team to find out if you are excluded or exempt from MEES.

WHAT IMPROVEMENTS ARE REQUIRED?

If you are not exempt or excluded then you must bring your properties up to a minimum “E” rating. It is up to you to decide what improvements to make under the Golden Rule. These changes could include:

• Cavity wall insulation
• Solid wall insulation (internal or external)
• Loft or rafter insulation (including loft hatch insulation)
• Draught proofing
• Thermostat boilers and room heaters
• Duct insulation
• Hot water showers/systems or taps (efficient)
• Heating controls (for wet central heating systems and warm air systems)
• High performance external doors
• Lighting systems fittings and controls (including roof lights and lamps)
• Pipework insulation
• Replacement or secondary glazing

Recent research has identified that EPCs understate the thermal efficiency of solid walls. The Government is proposing to recalibrate EPCs to give a truer reading. This could mean that some solid wall properties currently rated F under an EPC will no longer require any work and less work may be required in the case of a G rated property. This recalibration has yet to happen and with the upcoming General Election it is unlikely to do so anytime soon. We can advise you on what to do in the meantime.

KeyHomes will help you to understand MEES, if work needs to be done and what you can do if the necessary improvements cost you more than the resulting savings (i.e. they do not fit under the Green Deal Golden Rule).

WHAT ARE THE PENALTIES FOR NON-COMPLIANCE WITH MEES?

The MEES Regulations will be enforced by the Local Weights and Measures Authorities who can impose civil penalties for non-compliance.

The penalties are two-tiered. The penalty depends on how long the property had been rented in breach of the regulations:

1. Less than 3 months– In this case, the penalty is 10% of the property’s rateable value. The minimum penalty is £5,000 and the maximum £50,000.
2. More than 3 months– In this instance, the penalty is 20% of the property’s rateable value. The minimum penalty is £10,000 and the maximum £150,000.

WHAT IS THE IMPACT ON FREEHOLD INVESTORS AND DEVELOPERS?

Properties that do not meet the minimum standard and are not excluded or exempt from MEES may be reduced in value when it comes into force.

• Freeholder investors should audit their portfolio of properties to assess the impact of these Regulations.
• Developers should do likewise. However, there is an opportunity for them to acquire properties that do not meet the minimum standard at a reduced cost.

We can help you to understand the impact of MEES on your property portfolio and what actions you should take.