With the introduction of Minimum Energy Efficiency Standards (MEES) the value and importance of accurate EPCs assessments has become clear. Some well informed tenants are using the EPC rating of sub-standard building to negotiate favourable terms on dilapidations and rent reviews in the knowledge that the landlord will potentially have significant capital cost liabilities after April 2018.
The implications of the regulations will be seen across the property industry; with landlords needing to invest in improvements to avoid penalties in the form of fines or empty properties and diminishing returns. Although not yet quantified there is likely to be an impact on property values as non-compliant properties are re-assessed; causing concerns for landlords and lenders alike.
Whereas previously it was just another piece of paper required to complete a transaction and was obtained for the cheapest fee; the value of a properly assessed Energy performance Certificate; (EPC) is now coming to the fore.
What You Need To Know:
- MEES (Minimum Energy Efficiency Standards) are now Law.
- There are over 800,000? CHECK THIS registered Energy Performance Certificates (EPCs) that do not meet minimum requirements
- From April 2018 – The regulations will be enforced upon the granting of a new lease as well as lease renewals and extensions
- From April 2023 – The regulations will apply to all privately rented property in scope of the regulations; including where a lease is already in place and a property is occupied
- Penalties for non-compliance could be as much as £150,000
What You Should Do:
- DO Review your existing portfolio to identify the EPC ratings and those properties that are potentially at risk; D & below. Industry reports suggest that 33% of re-assessed D & E rated EPCs have dropped to F & G.
- DO Review the data used to produce existing EPCs to check for default entries and data that is incorrect or has changed since the EPC was completed
- DO Have potential at risk properties re-assessed to understand rating under current benchmarks
- DO Identify renovation options that would bring the property into compliance with the minimum standards and assess the costs of the options.
- DO Test if proposed options can be excluded under the MEES payback criteria or if other exemptions are applicable for the property.
What you should Not Do:
- DO NOT lodge a new EPC that will make your compliant building non-compliant if you are reviewing existing unexpired EPCs which are rated E or better and a re-assessment suggests that the rating is now F or G.
- DO NOT invest in upgrading the building HVAC, Hot Water, Lighting and building fabric without having the upgrading proposals modelled to assess impact of the EPC rating. Too often we have seen
- DO NOT acquire new property investments for rental without assessing the costs of complying with MEES legislation.
WHAT CAN WE DO TO HELP:
- OPTION 1– Assess the accuracy of the existing EPC on XXX in order to establish the exposure of the property to the MEES regulations.
- OPTION 2 – Assess the accuracy of the existing EPC on XXX in order to establish the exposure of the property to the MEES regulations and provide an updated EPC rating and costed solutions package based upon this information in order to make the property MEES compliant using this original data.
- OPTION 3 – Assess the accuracy of the existing EPC on XXX in order to establish the exposure of the property to the MEES regulations and undertake a new EPC in order to ascertain the most accurate and up to date assessment on the property should the original EPC be shown to be inaccurate.
- OPTION 4 – Assess the accuracy of the existing EPC on XXX in order to establish the exposure of the property to the MEES regulations and undertake a new EPC in order to ascertain the most accurate and up to date assessment on the property. Generate a fully costed, MEES compliant report, detailing available options going forward; using the revised assessment data.
- OPTION 5 – Manage your PRS exemptions should this be the route that you wish to pursue. Our exemption report will detail all building exemptions, clarify relevant exemption deadlines and supporting material to satisfy the necessary compliance criteria.
Contact us on 0203 917 1711 for more information or to discuss your requirements
MEES Solutions Ltd
4th Floor, 33 Cavendish Square, London. W1G 0PW.