In a welcome move, government announces new regulations from 2019, and lifts the cap on upgrade costs to £3,500
On Monday (5th November), the government made a long-awaited announcement about changes to the “Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015”, widely known as the Minimum Energy Efficiency Standards (MEES), which have been binding on landlords since April this year.
Under the current regulations, landlords renting out residential property have only been obliged to make improvements to band 'F' and 'G' properties if they could be fully funded through mechanisms such as the Energy Company Obligation (ECO) or the Green Deal. This “no cost to landlord” principle has rendered MEES more of an exercise in landlords obtaining exemptions than undertaking actual improvements because: the availability of Green Deal finance is extremely limited; and ECO only provides a “fully funded” solution for a small number of measures and then only in the minority of cases where the tenant meets the ECO qualifying criteria.
Government consulted on a number of changes to MEES, most importantly removing the “no cost to landlord” principle. The consultation itself closed on 13 March 2018, and there have been persistent rumours that the government would in its response propose to remove the “no cost to landlord” principle and stipulate that landlords would instead have to implement measures up to a “price cap” of £2,500.
The long-awaited government response was published on Monday, and contained a pleasant surprise for those urging tighter regulations. As expected the “no cost to landlord” principle is to be removed from 2019 (exact date subject to parliamentary time), but the price cap has been set at £3,500. This means fewer landlords will likely be able to secure "exemptions". The rise from £2,500 to £3,500 is particularly relevant in the case of inefficient boiler replacements, as even more difficult boiler replacement jobs (for example replacing old free-standing open flue boilers with wall-mounted ones) should cost less than £3,500. Government has also stipulated that an exemption should only be provided to a landlord where three independent quotes above £3,500 for the works have been obtained.
Exemptions written prior to the new regulations will not be valid from April 2020, and each landlord will therefore need to secure a new exemption (harder than before) or proceed with energy efficiency improvements.
What our Local Authority Partners should think about doing next
Landlords should act now to be ready for the new regulations or they may not be able to let out properties from 2019.
We are already working with council partners on MEES. We think councils need to get this new message across to private landlords operating in their council area, to make sure they are wholly aware of their duties. Our MEES team at AgilityEco can help councils use this announcement as a "stick” to remind landlords to consider first-time central heating seriously, especially where we can bring additional funding to the table such as Warm Homes Fund, FPNES, and the SGN Central Heating Grant Scheme for example.
Get in touch with us now to plan your Local Authority MEES Landlord strategy.