October 2015 Newsletter - A big announcement and MEES

NEWS

Welcome to the October 2015 edition of the CHPK Newsletter.

First of all we have a big announcement to make; Chris retired from the practice at the end of September. As some of you will know, Chris founded CHPK in 2004 as a small enterprise based in Essex with no plans for expansion. However, due to Chris’ expertise and customer focused attitude CHPK has continued to grow in terms of staff, services and clients to where we find ourselves today. We will continue to build on Chris’ vision to ensure CHPK always provides clients with a customer focused, expert service at all times.

Chris will still be involved with CHPK as a respected consultant and will continue to be involved in projects and instructions already underway. All of us at CHPK wish him a long and happy retirement.

You can follow CHPK on Twitter and Facebook for regular industry news and updates.

LEGAL UPDATE

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015

In March 2014 we reported on the Energy Act 2011 which forced the Secretary of State to make secondary legislation in relation to a Minimum Energy Efficiency Standard (MEES). As expected, the MEES for commercial properties is E, meaning that any property with an EPC rating of F or G does not meet that standard. We understand that some 500,000 properties already on the register have an F or G rating.

The simple rule is this; if a property has an F or G rating as of 1st April 2018 the landlord (or head lessee) cannot grant a new lease on that property. As of 1st April 2023 this not only applies to new lettings but existing lettings. This has, understandably, caught the headlines however we can provide clients with the facts behind those headlines.

There are exceptions: 

•The rules apply only to lettings, not freehold sales or purchases, albeit if the property is unlettable then this will inevitably have an impact upon the value of the property. 

•The rules do not affect owner occupiers.

•The rules do not affect tenants, unless they wish to sub-let.

If your property is caught by the rules you must upgrade the property to meet the MEES unless you can apply for an exemption under the regulations. Exemptions under the regulations last for 5 years, whereby they must be renewed. The exemptions are:

Relevant energy efficiency improvements – the regulations state that the landlord must carry out “relevant” energy efficiency improvements. These are defined as works that offer a payback period of seven years, listed in Part L of the building regulations and recommended in the EPC. If the landlord has carried out all the relevant energy efficiency improvements and the building still only achieves a grade of F & G the landlord can apply for exemption. If there are no relevant improvement to be made (i.e. don’t meet the above criteria) then the landlord does not have to carry out any improvement works and can apply for exemption.

Consent exemptions – if the incumbent tenant refuses permission to allow the landlord access to carry out the works, the landlord can apply for exemption.

Devaluation exemption – if the works devalue to the property by 5% or more of the market value, the landlord can apply for exemption.

Temporary exemption – new landlords can apply for 6 months “grace” period, however this is only applicable post 1st April 2023.

Damage exemption – if it is deemed that the relevant improvements will damage the fabric of the building, the landlord can apply for an exemption.

It is worth noting; for these regulations to be applicable the property must have an EPC. Therefore, if your property is exempt from having an EPC, it may not be advisable to obtain one voluntarily.

The penalty for non-compliance with these regulations is up to 20% of the rateable value, but capped at £150,000.00 and will be enforced by Trading Standards.

We advise all our clients to look at their portfolios to determine how these regulations may affect them.

If you require any further advice on these regulations and how they may affect you, please do not hesitate to contact us.