The long-anticipated ‘Guidance for landlords and enforcement authorities on the minimum level of energy efficiency required to let non-domestic property under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015’ was released by BEIS earlier this month.
The 71 page guidance document can be found in full here but for ease we’ve summarised the main points below.
Let the carrot meet the stick
Let’s first introduce the carrot; implementing energy conservation measures (ECMs) into non-domestic (or any) buildings will reduce energy bills, the carrot. But not all of us like carrot, so MEES is the stick. Legislation designed to improve the energy efficiency of our buildings by putting in place measurable targets, improving all EPC scores to the minimum rating of ‘E’.
Does it affect me?
MEES applies to all private rented property in England and Wales so both tenants and landlords with private leases should be aware of (and understand) how this legislation affects them.
To help explain exactly who will need to comply with the legislation BEIS have produced a decision tree which can be found on page 53 of their guidance document.
What should you do if MEES does affect you?
Firstly, you need to review the status of your EPC portfolio, do you have one for each building? Are they valid? What are the ratings?
Secondly, you need to review the status of your leases, what is the setup of your tenancies? When are they up for renewal? Where might you be granting new leases?
Thirdly, you need to prioritise. Buildings with EPC ratings of ‘F’, ‘G’ and we would advise ‘E’ are your starting point.
What should you do if MEES doesn’t affect you?
There are a number of exemptions designed to exclude those for which the legislation is unsuitable, BEIS offer comprehensive guidance on the exemptions in their guidance in Chapter 3.
If you are exempt you still need to act by registering your building(s) on the PRS Exemptions Register, this register will be made publically available for any party with a vested interest to lookup the details of your exemption. The register will be available for submissions from April 2017.
What if you need to assess your buildings?
Without wanting to repeat my earlier guidance (small data, big opportunity) it is vital to note that, if your building requires further assessment you should attempt to retrieve the raw data file (notably the .nct or .inp for most lodgements). The cost of EPCs range from £200 to £1,000 depending on the size and complexity of your building, so it pays to spend a little time digging and making speculative phone calls to original assessors (you can find their contact details on your EPC certificate).
What if you can’t access your previous data?
The importance of future planning can’t be overemphasised, EPCs need to be well scoped and take into account the wider context of your objectives. Your goals may include carbon reduction, fuel poverty reduction, social responsibility or maintenance budget savings. A well-planned MEES assessment has the potential to also act as an asset survey, tenant engagement exercise or proactive maintenance.
Outside the peripheral benefits, you need to make sure your assessor is spending quality time on-site gathering as much data as possible. Simple tasks such as recording boiler and air-conditioning plates can be used to override default values and improve your asset rating. Top of the list is overriding defaults for space heating and domestic hot water efficiencies, as well as lighting wattages.
Implementing the Energy Conservation Measures (ECMs)
BEIS have provided significant clarification on whether you need to implement the ECMs recommended or not. Previously, the legislation stated that if the ECM recommended exceeded a seven-year payback, it was exempt. BEIS have now clarified that if the ‘package’ exceeds a seven-year payback only then are the ECMs exempt. This package approach means that ECMs are less likely to be exempt according to the seven-year payback.
If you wish to register an exemption based on exceeding the seven-year payback criteria you will need to evidence three quotations for the works. We’ve got a couple dangers here;
- Quoting for exemption, and
- Extraordinarily high amounts of contractor surveys.
So it’s best to make sure that you understand which packages are recommended, feasible and well specified. Its best practice to get all contractors quoting for the same specification supplying the same assumptions.
The bottom line
You now have until 1st April 2018 or the next grant/renewal of your next lease to implement the recommended package of ECMs.
So will MEES be a success?
The framework is in place to improve the overall energy performance of the private rented market. It is the responsibility of the suppliers (such as ourselves) to educate landlords on the benefits of incorporating MEES into their wider asset management strategy. As a standalone obligation, MEES may struggle to realise its potential for decarbonisation.
Five steps to compliance
- Review your EPC portfolio
- Review the status of your tenancies
- Scope your MEES assessment (with clear objectives in mind)
- Source high quality EPC surveys
- Source a transparent and informative MEES assessment.