Don’t Be Lethargic – Plan your future Energy Efficiency now! 

Landlords need to start planning now to meet a minimum energy efficiency rating or face fines of up to £150,000, falling investment values and the prospect of not being able to borrow money against their properties if they do not meet the new Minimum Energy Efficiency Standard that comes into force on 1 April 2018.

From 1 April 2018, a financial penalty regime will start to apply to Landlords who let out premises that do not meet the Minimum Energy Efficiency Standard (“MEES”).  A property with an F or G rating will be below the minimum acceptable rating of an E rating.  Failure to achieve the relevant minimum standard without a permitted reason will result in significant financial penalties for Landlords.  Current indications are those penalties will be between £10,000 and £150,000! Local  authorities will enforce the regulations but it is not yet clear whether they will be allowed to keep the fines collected. 

Current estimates suggest that around 1 in 6 properties will fall below the minimum E standard.   More properties will fall the minimum standard if, as expected, the minimum E standard rises though the Government does not indicate how quickly that may be nor what the ultimate standard will be. 

Landlords should now be considering what they can do to avoid penalties. 

Leases granted now are likely to go beyond 1 April 2018 so consideration should be given as to what steps can be taken with a view to improving the Energy Efficiency Rating of their properties in advance of the introductory dates.  If they are not reviewed then it may mean that a property cannot be let in the future leading to lower investment values.    Lenders are also likely to impose conditions on finance agreements which could result in properties with an F or G rating being no longer acceptable as security for borrowing.