MEES exemptions for landlords letting sub-standard property

In our previous briefing on the changes to MEES regulations, we looked at its application to non-domestic property, and what the Regulations prohibit.

In broad terms, Part 3 of the MEES Regulations prohibit a landlord of non-domestic, ‘sub-standard property’ from granting a new tenancy (on or after 1 April 2018) or continuing to let on or after 1 April 2023 without a legitimate reason. ‘Sub-standard property’ for this purpose is where a property (or the building of which it forms part) has a valid EPC with a rating of F or G.

In this article, we look briefly at the circumstances that permit landlords to let or continue to let non-domestic, sub-standard property.

The PRS Exemptions Register

To claim an exemption and avoid enforcement, landlords must enter the relevant details on the Private Rented Sector Exemption Register or ‘PRS’. The main exemptions are as follows:

Consent exemption – where a tenant’s consent or third party’s consent is needed to carry out the works but consent is not forthcoming or is granted subject to a condition with which the landlord cannot comply.

Devaluation exemption – where an independent surveyor confirms that the relevant energy efficiency improvement would result in a reduction of more than 5% in the market value of the property or building of which it forms part.

Temporary exemptions – there are a number of these which include where a person became the landlord by purchasing an interest in the property when it was already let. In these circumstances, the prohibition on ‘continuing to let’ is postponed for six months from the date of purchase.

Where all relevant energy efficiency improvements have been made (or there are none that can be made) and the property remains sub-standard. (This is not referred to as an exemption in the MEES Regulations but it is referred to as an exemption in the PRS Exemptions Guidance.)

Some types of energy efficient improvements cannot qualify as relevant energy efficiency improvements, e.g. where the seven-year payback test is not satisfied or the solid wall insulation exemption applies.

Generally, exemptions are time limited. Broadly, none will last more than 5 years and exemptions cannot be passed on from the landlord who registered the exemption to a successor landlord.

The criteria for qualifying for the exemptions are complex and can be difficult to satisfy. If you have a sub-standard property and think you may qualify for one of the exemptions, we would recommend that you seek specialist advice. Please contact a member of our team below.