How Minimum Energy Efficiency Standards (MEES) restrict ECO funding for landlords

How Minimum Energy Efficiency Standards MEES restrict Energy Company Obligation ECO3 funding for landlords

Energy Company Obligation (ECO) funded energy efficiency measures available to the private rented sector are restricted in relation to the Minimum Energy Efficiency Standards (MEES) placed on landlords.

The restrictions depend on a property’s Energy Performance Certificate (EPC) rating. Private rented properties already rated EPC band E or above, can benefit from ECO measures, however, EPC rated properties in band F and G are only available for high cost measures (solid wall insulation and renewable heating). This is to discourage the use of ECO to meet the minimum standard imposed on landlords by MEES.

Landlords can only access ECO funding towards insulation and first time central heating, with ECO funding for broken boilers or heating systems being unavailable to landlords regardless of EPC rating.

The restrictions stem from MEES which rule it illegal to renew existing tenancies, or grant new tenancies if the building has less than the minimum EPC rating of E, unless the landlord registers an exemption.

MEES for Landlords

MEES Landlords

Landlords of buildings within the scope of the MEES Regulations must not renew existing tenancies, or grant new tenancies if the building has less than the minimum EPC rating of E, unless the landlord registers an exemption.

Non-compliance penalties are estimated at £5000 and it will be deemed unlawful for landlords to let the property.

Update to MEES April 1st

Following an amendment to MEES regulations, from 1st April 2019, domestic landlords must use their own funding to cover the cost of improving their property to EPC band E. This requirement is subject to a spending cap of £3,500. This no longer applies to ECO funding for private renters installing first-time central heating in 2020.

The update is inclusive of those who previously registered for the ‘no cost to landlord’ exemption prior to regulation changes, which will no longer be exempt for five years, and will now need to make the necessary improvements to their property to ensure it meets EPC band E by April 2020.

The MEES spending cap

The £3,500 spending cap applies to the overall cost of improving the property and is not a cap applied to individual measures. Landlords only need to fund what they need, to improve the property to band E. The spending cap is not a requirement and research shows that the average cost of improving a property from EPC band F or G to band E, would be much less than this.

In cases where a landlord is unable to improve their property to band E within the £3,500 cap, then they should install all measures applicable up to the cap, and then register an exemption on the basis that all relevant improvements have been installed and the property still remains below an E.

Exemptions to MEES for Landlords

The scope of MEES doesn't cover all rented properties.

Currently excluded from MEES are:

  • Residential property leased to companies
  • Second homes
  • Residential property granted on or after April 1st 1990 where the rent is over £100,000 per year
  • Residential property where the principal rent is £1000 or less (in Greater London) or £250 or less (elsewhere)

In addition, for properties that do come under the current scope, there are several exemptions to the minimum energy efficiency standard:

  • Wall insulation exemption - a property cannot be improved to an E rating because the recommended wall insulation measure would have a negative impact on the property - this mainly applies to listed buildings.
  • All recommended improvements have been made but the property remains below an E.
  • Consent exemption - the consent for energy efficiency measures was required and sought but was refused.
  • Devaluation exemption – an independent RICS surveyor provides evidence the installation of a measure would devalue the property by more than 5%.
  • Exemption on recently becoming a landlord – the date on which they became a landlord, the qualifying circumstances on which they became a landlord

Future changes to MEES

The scope of MEES is expanding from the current catchment.

From April 1st 2020, the regulations will extend to all residential privately rented property which are required to have an EPC.

Furthermore, from April 1st 2023, MEES will be extended to include all existing commercial leases.

Contact Us

YES Energy Solutions is an industry approved installer that is fully accredited to work on the Government’s ECO scheme.

We have access to funding to help landlords slash their installation costs and make their properties warmer and cosier for their tenants, whilst cutting energy bills.

Find out how we can help you save energy and money today.

T: 01422 880100 (office hours: 9am - 5pm, Mon - Fri)

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