Landlord Focus – MEES; Making the Mark

MEES has been in for six months now and is beginning to make its mark in the lettings industry. For many properties, MEES has not been an issue as EPCs have been around for over a decade and as EPCs have been a requirement for Landlords in order to let-out a property since April 2008, the majority of rental properties meet MEES requirements and have an acceptable EPC. But (there’s always a but, isn’t there?), as Letting Agents we are seeing a flurry of activity with Landlords who have had tenants in situ for over a decade, don’t have an EPC and even Landlords who had an EPC which wasn’t up to standard and are now being chased down to either comply or face legal action. Our Property Managers are busy advising and arranging quotations, and so, I thought, with this increased interest, now was a good time to have a recap on MEES and offer some practical advice if you are a Landlord facing threat of action because of MEES.

Back to Basics

Let’s begin with the acronyms, shall we?

MEES: Minimum Energy Efficiency Standards

EPC: Energy Performance Certificate

Essentially, in April, the Government brought in MEES for rental properties which do not meet sufficient EPC ratings. But what is an EPC? Originally introduced for household appliances such as washing machines and fridge freezers, EPCs are used exactly the same with property; to assess how energy efficient the property is. They are a guide for a home buyer or prospective tenant as to how efficiently the property uses energy. It advises how much it will cost to heat and light the building for a year and summarises this from A to G, with A being the most efficient. An EPC also advises what the rating could be if specific improvements are made and sets out the most advantageous of those improvements along with their return in terms of reduced bills and an estimated cost:

The above is an example of a 3-bed, semi-detached property, built in the early 1990s which has had improvements including cavity and loft insulation.

MEES are the standards which the Government have put in place to ensure tenants are not living in substandard conditions. Essentially, if your rental property is rated at an ‘F’ or ‘G’ you need to make some improvements to the fabric of the property to raise the EPC rating to an ‘E’ or above.

Is this you? Here’s what you need to do:

Improving your EPC rating to that all important ‘E’ or above.

Here’s the thing; we are coming across a few Landlords with very old properties. Modern properties built with insulation, brick, plaster and insulated breeze blocks are always going to come up higher on an EPC than an old cottage with ceilings made of lath and plaster. No-one is expecting you to spend a fortune in making your property ‘A’ rated, it’s unrealistic. However, once an official has identified that your property does not meet MEES, and you have a tenant in place, you’ve got three months in which to make your improvements or face a fine of between £2,000 and £4,000. Essentially, now is the time to act:

  1. Consider having a new EPC carried out

If your tenants have been in place for a considerable amount of time and your current EPC rating is less than an ‘E’, I would recommend having a new EPC carried out. It may be that during that period of time, you or your tenant may have made some home improvements carried out which might affect the rating. Did you take advantage of the Government scheme to get your property insulated? Did you have the windows upgraded to UPVC ones – all important factors when it comes to an EPC rating. Also, in the advent of MEES, an EPC report will now advise you what changes you can make and how much they are likely to cost, so you have an idea, of how much you may need to budget to make these improvements.

  1. Arrange some quotations

So, you’ve been told you don’t meet the mark. You are going to have to invest some time and money to resolve this and remember, if you have tenants in place, you only have three months to do this. Speaking honestly, the advice on the EPC varies from inspector to inspector (from my experience anyway), so my advice would be to obtain quotes in all areas where the EPC report suggests you could make improvements. I would also look at what is likely to boost the EPC rating to an ‘E’ or above. The most common areas are:

  • Heating: We are commonly seeing properties with old and inefficient night storage heating, so consider what heating you could have installed. Electric night storage heating is on a par with gas central heating to replace (approximately £4,000 – £10,000 depending on size of property), so if you are considering a quotation for electric heating, explore if there is a possibility for gas too. It may be that there is no gas supply to the property and no-way of running a supply in either but is oil heating a possibility? Rural properties often run on oil or LPG. If electric is the only option, check if you can have a second, off-peak meter installed (if there already isn’t one) as this will make night storage heating much cheaper to run and more attractive to prospective tenants. We are seeing EPC reports stipulating a minimum specification for electric heaters, so ensure you read the report carefully and check the heaters you are purchasing with the EPC inspector, prior to installing, to ensure you will meet standards.
  • Windows: Again, you may have UPVC windows, but they may be old and inefficient. Older properties might have wooden sash windows with single pane glass and upgrading to double glazing may make all the difference when it comes to improving your EPC rating. However, some older properties may be Grade II listed and have covenants preventing UPVC windows, so ensure you check with your local building authority if your property is over 80 years old.
  • Roof & Cavity Walls: Simply insulating the loft might be enough to boost the property up into an ‘E’ on the EPC. Installing cavity wall insulation retrospectively can be expensive, and it’s not always possible for older properties, but it’s likely to make a real difference to the EPC rating.
  1. Instruct the work and have the property re-inspected

Once you’ve had all the quotations in, you’ll be able to appraise the most cost-effective choice for your property. Work may need to be carried out whilst your tenants are living at the property so be mindful to keep them informed regarding access and the disturbance this may cause to your tenants. If the work is to be extensive, you may have to offer to put them up in alternative accommodation whilst the work is carried out, at a cost to you.

Are there any exemptions?

Surprisingly, there are:

  • If you have carried out all cost-effective energy efficiency improvements, either within a seven-year payback or under the Green Deal’s “Golden Rule”, and it still doesn’t meet the standards.
  • If a third party has refused to let you make the improvement work, such as a local authority or the sitting tenant.
  • If the improvements would damage the property or devalue it by five per cent or more.

Ultimately, although there are some exemptions, from 1st April 2020 you won’t be able to rent out rental property if its EPC rating is less than an ‘E’. This would mean evicting your tenants if you hadn’t complied, rendering them homeless. So, if you are worried about your ‘F’ or ‘G’ EPC rating, now really is the time to act.

The good news is that we are here to help. We have knowledgeable Property Managers experienced in EPCs and MEES. By managing your property, we can work with you and our third-party contractors to obtain quotes for work and find you the most cost-effective solution to meet MEES standards. Please don’t hesitate to personally contact me 01452 310999, email us at gloucester@surepropertygroup.com or call into our offices in Worcester Street, Gloucester, to discuss your MEES situation further.

We look forward to hearing from you.

Best wishes,

Tom Smith

Director

Sure Sales & Lettings