From April 1st 2019, landlords of cold homes in England and Wales will have to pay up to £3,500 (inc. VAT) to improve the insulation and/ or heating of property before they can rent it out to new tenants. Specifically, the new Minimum Energy Efficiency Standard (MEES) regulations apply to any privately rented home banded F or G (the bottom two bandings) on an Energy Performance Certificate.
The MEES Regulations requiring landlords of F and G banded homes to make improvements have actually been in place since last year. But it’s only now that the government has introduced the minimum investment requirement of £3,500 - before this, landlords only had to try to meet the standard if grant money was available.
The regulations will be tightened further next year. Currently, landlords only have to make improvements to cold homes before new tenants move in. From next year (1st April 2020) landlords will have to make the changes even where tenants are staying in place.
You can find more guidance around the new regulations on the government website.
The private rented sector has the largest proportion of the most energy inefficient homes (6.3% are F and G rated properties, compared to around 0.7% of social housing). Nearly half (45.7%) of households living in such properties are in fuel poverty.
Improving the energy efficiency of private rented homes will not only improve comfort and reduce energy bills but will reduce ill health. National Energy Action estimates that 10,000 deaths each year are attributable to living in a cold home, similar to the number of people who die from breast or prostate cancer each year. Moreover, work undertaken by the Building Research Establishment (BRE) highlights that cold-related illnesses from privately rented F and G rated properties costs the NHS £35million per year.
It has not proved easy to tackle this issue, as it is landlords who are responsible for investing in improvement measures, while it is the tenant who benefits from the resulting reductions in fuel bills.
Landlords should ensure that they issue potential tenants with an Energy Performance Certificate (EPC) every time they rent a home out Not only is this a legal requirement in itself, it’s important security for landlords. It can be difficult to evict problem tenants (for non-payment of rent, for example) if the landlord hasn’t complied with all relevant regulations, including issuing an EPC when the tenant moved in.
Where properties are currently rated below ‘E’ on the Energy Performance Certificate, landlords will need to invest up to £3,500 to get them to the required standard before re-letting them.
Examples of improvement measures include installing floor insulation, low energy lighting, increasing loft insulation, or changing to a more efficient heating systems. The Residential Landlords Association indicates the average cost to improve an F or G rated property to a band E is expected to be around £1,200, well below the upper ceiling brought forward under the new regulations.
Some homes will need more than £3,500 to bring them up to an E standard. In that case, landlords who can prove they’ve got as far as they can with energy improvements within that cap, can still rent out the property, even with an F or G banding.
In this case the landlord will needs to apply for a ‘high cost’ exemption to their local authority (who maintain the PRS Exemptions Register) to show that they have taken all reasonable steps. The exemption will last for five years. Any exemptions of F and G rated homes already listed on the PRS Exemptions Register under the more generous MEES rules in place last year, will expire on 1st April 2020.
Where possible, Energy Saving Trust advises landlords to go at least to an E standard and not to be bound by the £3,500 limit on investment. The government is likely to increase the minimum standard incrementally from E, to D, then C in the future. Undertaking a single whole house retrofit, tackling insulation, windows and heating system to get a cold property to a D or C standard in one go is likely to be cheaper than a series of upgrades.
We’ve got more advice on improving your property on our website.
Landlords must disclose the energy rating of the property when they advertise it, and they must show the full Energy Performance Certificate to potential tenants at a viewing. If the certificate isn’t offered at this stage, tenants should ask the estate agent to supply it.
Tenants should make sure to check the EPC rating before agreeing to rent a home and be cautious if a property is F or G banded.
Tenants already in a rented home, who have never seen, or do not currently have the Energy Performance Certificate, should ask their landlord or managing agent to provide it. If they then discover they are in an F or G banded home, they should speak to their landlord about what steps will be taken to ensure it is improved by April 2020.
If no action is taken to improve an F or G rated home, the Council should be able to help. Under housing health and safety rules they are obliged to help tenants in dangerously cold homes. The council can order landlords to make energy saving improvements. Before going down this road, tenants should discuss the communication the council will have with the landlord. Unfortunately, it is still possible for landlords to evict tenants who ‘cause problems’ in this situation.
Energy Saving Trust welcomes the new regulations and supports the government in its ambition to raise the standard further to a 'D' rating by 2025 and a 'C' rating by 2030.
‘D’ by 2025 is already required in Scotland and the Scottish Government is consulting on an additional target of ‘C’ by 2030.