There has been much talk about the effect on landlords of the new standards around energy efficiency, known as the Minimum Energy Efficiency Standards (MEES). Any property in England or Wales (the rules are different in Scotland) that now achieves an F or an G rating can no longer be let to new tenants. Although it will still be able to be let to existing tenants for the next couple of years, until April 2020 for residential property, with an extra three years for commercial at that point in time it will need to hit the new standards in order to continue being let out.
The challenge for many landlords is the capital costs they need to incur to get the property to the standard it needs to be in order to let it out. This applies whether it is a residential or commercial property. Arguably, landlords of commercial property have a much tougher target to hit if they own a building with a number of different offices, all let to different companies.
To upgrade such a property will usually require any works to be taken at evenings and weekends, in all likelihood incurring a higher cost than would be the case if the work could take place in the day. For residential properties that now cannot be re-let until the property has hit the required standards, landlords are also hit with a loss of rental income.
Non-compliance is not an option however; the penalties for non-compliance start at £2,000 if a landlord has sublet a property in breach of the regulations for less than 3 months, rising to £4,000 for a breach of 3 months or more with a maximum fine of £5,000.
But this is a maximum of £5,000 per property, so the local authority may decide to fine a landlord on more than one property, and, if after previously being fined, the landlord proceeds to let again and fails to meet the regulations again, they may be fined up to £5,000 in relation to the new tenancy.*