Tag Archives: Energy Efficiency

What is the “cost cap” for domestic MEES? When are improvements “too expensive”?

Originally, the idea was that improvements would only have to be made to domestic properties if they could be achieved “at no cost” to the landlord. This policy depended upon various forms of funding being available to landlords to make any necessary improvements.

Following the effective collapse of Green Deal funding and the withdrawal of many grants, the Government launched a consultation in December 2017 to review this policy.  This occurred just before the Energy Efficiency (Private Rented Sector) (England and Wales) Regulations 2015 began to take effect in April 2018 therefore little actual evidence was available about their real impact.

The consultation ran until March 2018 with summary responses being published in July 2018 before the Government responded with new policy in November 2018.  The new policy effectively requires landlords to spend up to £3500 inclusive of VAT (the cost cap) per property after October 2017 in order to bring it up to the Minimum Energy Efficiency Standard (MEES).

A full response is available online:

The summary states that, subject to timely Parliamentary approval, the Government intends to amend the regulations and implement them during 2019 as follows:

  1. Introduce a landlord financial contribution amendment with the landlord contribution capped at £3,500 and inclusive of VAT;
  2. Any investment in energy efficiency made since October 2017 to be counted within the cap;
  3. Any available third-party funding, including Green Deal finance and local authority grant funding, to be counted within the cap;
  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;
  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;
  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;
  7. Upon enactment, the amended regulations will apply upon the granting of:
    1. a new tenancy to a new tenant, and,
    2. a new tenancy to an existing tenant.
  8. 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.

How is the building area calculated?

Floor areas for energy assessments are based upon Gross Internal Area (GIA) as defined in the current RICS Code of Measuring Practice.  Further information can be obtained here.

In order to complete a Display Energy Certificate, the GIA of the building must be accurately determined.  The energy assessor is responsible for verifying any value provided and for ensuring that it is accurate.  The default fallback position is that the energy assessor will be required to measure the building to determine the GIA.

However, it is recognised that the buildings requiring DECs are often large and complex.  As such, it is likely that other professionals are involved in building management and a GIA for the building may be available from other means.  This can avoid the lengthy and costly process of the energy assessor measuring the entire building e.g. a large college or acute hospital.  Therefore, DEC assessors are authorised to accept the following sources of information providing they take appropriate sample site measurements to verify the figures used are reasonable.  The acceptable secondary sources are:

  1. Measurements from scaled drawings: – This method can be used where professionally produced scaled plans are available for the building.  It is most useful when measurement layers have been turned on.  Particular care must be taken to ensure that measurements shown are Gross and not Net of internal walls etc.
  2. Areas from a formal Asset Register or similar: – This is often the simplest method where a suitable document exists but the energy assessor must be able to demonstrate that this is a formal document that has been professionally produced.  Documents in electronic format are acceptable.  Particular care must be taken to ensure the figures used are clearly identifiable, accurate, current and Gross not Net.  It is not unusual for these registers not to be updated to reflect building changes or for inaccurate or Net figures to be input in error.
  3. Information from an Architect or Surveyor who has reason to know: – Where an Architect or Surveyor who is registered with an appropriate professional body has undertaken work relating to the building they may have established the GIA.  This value can be used with appropriate supporting evidence.  This is also the justification used to accept a GIA printed on professionally produced scaled drawings of a building.

Uniquely for DEC’s, it is sometimes acceptable to use alternative measures of floor areas for some specific types of building.  However, these exceptions are very limited and the software used to produce the DEC converts these values to GIA before calculating the building rating.  The conversion is very conservative and so the rating will nearly always be considerably worse if these values are used that if the GIA is used directly.  Additionally, the GIA is normally available when a suitable source of these values is provided and so using them is not advisable.

Do I need an Advisory Report completing as well?

Advisory Reports (AR) provide information about the way energy is managed and used within a building.  They provide recommendations for improving energy efficiency which can help reduce energy bills if successfully implemented.  Even where they are not required, it is often beneficial to have the AR for a building completed or updated.  This is particularly true when the energy assessor has to complete a site visit to issue the DEC as the additional work for the assessor is limited and this should be reflected in the assessment price.

In England & Wales, a valid Advisory Report is legally required to be in place before a DEC is issued.  In reality, they are usually both added to the national register at the same time when required but they can be completed separately.  The Advisory Report must be for the same building and occupier as the DEC so they should both be accessible under the same entry on the register.  It is the responsibility of the energy assessor to check the register to ensure that the AR is in place before lodging the DEC.

In Scotland, Advisory Reports are voluntary but will be required if it is intended to use the DEC within the Energy Saving Opportunities Scheme (ESOS).

What is a “Building” for DEC purposes?

For the purposes of Display Energy Certificates, a building must have a roof, walls and use energy to condition the indoor climate.  This is the case where the building has any of the following fixed services:

  • Heating;
  • Cooling; and/or
  • Mechanical ventilation (this means the supply of fresh air and extraction of stale air – not just an extraction fan).

It is not uncommon for a site to have multiple buildings or a large building built is multiple phases.  If two or more buildings on the same site are linked by a fully enclosed structure consisting of a roof and walls, even if the link is not itself conditioned, then the combined buildings can be considered a single building for DEC purposes providing they have not been designed or altered to be used separately (usually by separate occupiers).  This approach is particularly sensible when the different parts are serviced by the same common systems and where sufficient sub-metering is not in place.  However, they may still be treated separately which can be useful in identifying energy efficiency improvements and monitoring energy usage.

NB: Since February 2009 site based DECs and ARs no longer meet the requirements of the legislation.  All qualifying buildings on a site must now have their own Display Energy Certificate and Advisory Report.

I’m a domestic landlord, what do I need to do for MEES?

Complying with the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and MEES can seem more than a little daunting.  However, the Department for Business, Energy & Industrial Strategy have simplified the process into a single flow chart to help.  Combined with expert advice and support, this chart will help guide landlords through the process required to comply with the regulations.

MEES Process Flow Chart
Source: Page 81, Guidance for landlords and Local Authorities on the minimum level of energy efficiency required to let domestic property under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, BEIS (Oct 2017).

How do I register a MEES exemption on the PRS Exemption Register? What evidence is required?

All exemptions claimed by landlords to improving domestic properties with an EPC rating at F or G must be registered on the PRS Exemptions Register.  This is an online process and does not cost anything to complete but you will need to have the correct supporting evidence available when you make your application.  In addition to registering exemptions, you can also search for details of exemptions that have already been registered.

To access the PRS Exemption Register visit https://prsregister.beis.gov.uk/

It is very important that you recognise that a single property may be subject to a number of different exemptions that apply to different improvements.  An exemption from one improvement does not exempt a landlord from making other relevant improvements.

Additionally, you will need to ensure that you have completed the correct processes and gathered sufficient evidence before registering an exemption.  There are significant penalties for registering a false exemption on the PRS Exemptions Register.

The Department for Business, Energy & Industrial Strategy (BEIS) have issued the guidance below regarding the minimum evidence required to support each type of exemption.

Exemptions Register Information Requirements
Information required for all exemptions:
    • The address of the relevant rental property;
    • which exemption to the Regulations the landlord is registering;
  • a copy of a valid Energy Performance Certificate for the property.
Additional Information and Evidence Related to Each Specific Exemption
Registering an exemption under the regulation 25(1)(b) exception – where a recommended measure is not a “relevant energy efficiency improvement” because the cost of purchasing and installing it cannot be wholly financed at no cost to the landlord (see Regulation 24(3)):
    • A description of why the landlord has been unable to obtain adequate ‘no cost’ funding.
  • Optionally, the landlord may also provide a copy of any evidence on which the landlord relies to demonstrate that they have been unable to access relevant ‘no cost’ funding to fully cover the cost of installing the recommended improvement or improvements.  This evidence of a landlords inability to access relevant ‘no cost’ funding may include a notification from a Green Deal provider advising that no Green Deal finance is available for a recommended measure, or that funding is only available to partially cover the costs.

Please Note:  The Government has decided to replace this exemption with a cost cap of £3500 inc VAT.  An implementation date for this is yet to be confirmed by Parliament.

Registering an exemption under the regulation 25(1)(a) exception – where all relevant improvements have been made and the property remains below an E:
    • Details of any energy efficiency improvement recommended for the property in a relevant recommendation report (if separate to the relevant EPC), including a report prepared by a surveyor, or a Green Deal Advice Report;
  • Details, including date of installation, of all recommended energy efficiency improvements which have been made at the property in compliance with the Regulations.
Registering an exemption under the regulation 25(1)(b) exception – where the property is below an E and there are no relevant improvements which can be made:
  • A copy of the relevant report to demonstrate this (if separate to the relevant EPC).
Registering a wall insulation exemption under regulation 24(2):
  • A copy of the written opinion of a relevant expert stating that the property cannot be improved to an EPC E rating because a recommended wall insulation measure would have a negative impact on the property (or the building of which it is a part).
Registering a consent exemption under regulation 31(1):
  • A copy of any correspondence and/or relevant documentation demonstrating that consent for a relevant energy efficiency measure was required and sought, and that this consent was refused, or was granted subject to a condition that the landlord was not reasonably able to comply with.

Please Note:  Where the party who withheld consent was a tenant, the exemption will only remain valid until that tenant’s tenancy ends.  When that tenant leaves the property (or after five years, whichever is soonest) the landlord will need to try again to improve the EPC rating of the property, or register another exemption, if applicable.

Registering a devaluation exemption under regulation 32(1):
  • A copy of the report prepared by an independent RICS surveyor that provides evidence that the installation of relevant measures would devalue the property by more than 5%.
Registering an exemption upon recently becoming a landlord (regulation 33(1) or (3)):
    • The date on which they became the landlord for the property, and
  • the circumstances under which they became the landlord.

Please Note:  Where a person wishes to register an exemption upon recently becoming a landlord, the exemption will last for a period of six months.

Do I need to get my tenant’s consent to make improvements?

There is no specific requirement in the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 for a landlord to seek tenant consent to carry out works.  However, depending on the terms of the tenancy agreement between a particular tenant and landlord, the landlord may need to obtain tenant consent before undertaking certain works (energy efficiency related or otherwise).  Where this requirement already exists, the PRS Regulations recognise that consent should be obtained before work is undertaken.  This is considered entirely compatible with the requirement to allow a tenant quiet enjoyment of the property.

Between April 2018 and April 2020 landlords are only required to improve F or G rated properties before signing a new tenancy agreement. In their guidance the government states that they expect “many landlords will make improvements while a property is vacant between tenancies” and that therefore “tenant consent may not be a consideration”.

The guidance issued goes on to consider this area in more detail.

“One issue which landlords should consider is whether or not they have the right to carry out improvement works under the terms of an existing tenancy. Landlord rights of entry to undertake work on a property typically only extends to the carrying out of repairs or maintenance, rather than making ‘improvements’. As a majority of the measures landlords can install to meet the minimum standard will be considered improvements, a landlord may not have an automatic right of entry to install the measure or measures, and tenant consent may be necessary.

“On the other hand, if the tenancy agreement specifically gives the landlord right of entry to undertake ‘improvement works’, tenant consent may not be necessary. In all cases the wording of individual tenancies will dictate what is and is not permissible without consent.”

Additionally, landlords are reminded that they are under an obligation to make reasonable efforts to obtain third party consents and should not behave in such as manner as would discourage third party consent being granted.

“The Regulations require the landlord to make ‘reasonable efforts’ to obtain third party consent. Reasonable efforts may include attempts on a number of separate occasions and using a number of different available means of communication to secure agreement from, for example, a tenant or superior landlord, with evidence to show this had been done (in the case of planning consent refusal, evidence of a single application and subsequent refusal is likely to be sufficient evidence).

“Broadly speaking, it is thought that that it will not be reasonable for the landlord to comply with a condition which may reduce the landlord’s ability to let the property or if it involves unreasonable costs.”

As a landlord, do I have to pay for improvements? What is “no cost” funding? Where can I find out more?

WARNING:  This exemption is only available until April 2019 due to changes being made to the legislation.  After this, landlords will be required to fund improvements up to a £3500 cap.

A Landlord is only required to make improvements to meet the minimum standard if they can do so at no cost to themselves.  No cost funding can come from a range of sources including:

    • Green Deal Finance,
    • ECO help to heat funding,
  • Local Authorities home energy efficiency grants,
  • tenants,
  • any other source not repaid by the landlord,
  • any combination of the above.

For general advice and assistance on energy efficiency funding, landlords can contact the Energy Savings Advice Service on 0300 123 1234.  For scheme specific information landlords should:

    • Green Deal Finance: Search for a local Green Deal Provider (details can be found on the Green Deal Finance Company website www.gdfc.co.uk) or through the enquiry form on the GDFC website;
    • ECO help to heat programme: Contact the Energy Savings Advice Service on 0300 123 1234 or email energy-advice@est.org.uk, (where appropriate the landlord may need to ask their tenant to contact ESAS themselves);
  • Local Authority funding: Contact their local Authorities for information on any home energy efficiency grants available.

Note: The New Regulations

On 19th December 2017 the Department of Business, Energy and Industrial Strategy (BEIS) launched a new consultation to amend the Regulations.  The consultation concluded on 13 March 2018, and legislation has subsequently been made to introduce a funding cap.  From April 2019 Landlords will be required to make improvements to a property up to the cap (currently £3500 per property) before being able to claim an exemption.  At the same time the original “no cost” exemptions will be removed.

Further information can be found on the BEIS website on GOV.UK

Do I have to make particular improvements like those listed on the EPC? Are there any recommended or required materials which should be used to undertake the improvement works?

The guidance issued by the Department for Business, Energy & Industrial Strategy on this subject is very clear.  It states:

There are no specified materials or improvement measures; a landlord is free to do whatever they like with their property so long as the EPC rating can be raised to meet the Minimum Energy Efficiency Standard. The most assessable source of advice would be the recommended measures section on EPC for the property, but landlords can seek advice from other suitably qualified experts if they wish.

Are holiday lets and hotel rooms covered by MEES?

Holiday lets, together with rooms in hotels and bed & breakfast accommodation are typically let under a licence to occupy, rather than a tenancy.  Therefore, this type of rental property is normally outside of the scope of the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and not required to meet the MEES.

If there are any concerns about whether a property is occupied under a licence or a tenancy, and whether the landlord is subject to the Regulations, independent specialist legal advice should be sought.

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