Changes proposed to the Minimum Energy Efficiency Standards (MEES)

On 7 February, the UK Government published a consultation on changes to the Minimum Energy Efficiency Standards (MEES) in domestic private rented sector (PRS) properties in England and Wales. This consultation follows one recently published on changes to the Energy Performance Certificates (EPCs) regime, and the two are inextricably linked. Properties which are legally required to have an EPC and are let on a relevant tenancy are required to meet the MEES. You can read more about how to comply in the CLA’s guidance note on EPCs and MEES in domestic residential properties.

CLA members who own PRS properties in England and Wales will be aware that the last government had proposed to upgrade the MEES in such properties to EPC ‘C’. The previous government wanted to mandate the higher standard by 2025 for new tenancies, and 2028 for existing. These proposals were scrapped by Rishi Sunak in September 2023, causing much uncertainty for landlords.

The Labour government is now consulting on proposals to require landlords in the domestic PRS to meet EPC ‘C’ by 2028 for new tenancies, and 2030 for existing tenancies. The consultation includes proposals for transitional arrangements to the new standards, an increased cost cap, a new affordability exemption, and applying the MEES to short-term lets.

Currently, the MEES are based on the Energy Efficiency Rating (EER) on an EPC, which is an estimation of the cost of the energy demand of the home. Because of the proposals in the EPC consultation, the basis of the MEES is likely to change, and the government is consulting on which metric(s) should be the basis of future targets.

The MEES consultation considers three of the metrics proposed in the EPC consultation. These are: fabric performance, smart readiness and the heating system.

Fabric performance – This metric would assess energy performance based on the fabric efficiency of the building. The measures recommended on an EPC could include insulation, draught proofing and double glazing. The measures would be intended to improve thermal comfort, reduce space heating demand, and enhance the efficiency of the heating system.

Smart readiness – This metric would assess energy performance based on the optimal performance of the building’s energy use. The metric would also assess the building’s ability to take advantage of ‘flexible’ energy. For example, the measures recommended could include solar panels, batteries, and smart meters.

Heating system – This metric would assess the efficiency and emissions of the building’s heating and hot water system and could include cooking appliances. The metric would rank different heating systems based on environmental impact, efficiency, and how well they align with achieving net zero emissions goals. Recommendations on the EPC based on this metric could include the installation of heat pumps, installing heating controls, hot water cylinder upgrades, and solar water heating.

The government is proposing that while a cost-based metric (similar to the current system) should remain on an EPC it should only be there to inform and should not be a basis of the upgraded MEES.

There are three options for the new minimum standard of ‘C’ to be based on:

Option 1 – Landlords will be required to meet EPC ‘C’ based on a fabric performance metric, and then a secondary metric which, at the landlord’s discretion, could either be a smart readiness metric, or a heating system metric. This option is the government’s preferred plan and would require landlords to first install fabric improvement measures such as loft insulation, cavity wall insulation, and double glazing.

Option 2 – There would be a dual metric on which landlords would need to meet EPC ‘C’ and therefore a primary metric for landlords to meet. If the primary metric was met, assuming they had not reached the cost cap, they would be required to install improvements to the performance of the secondary metric. Under this option, it would be the landlord’s discretion which metric they prioritised. There are therefore three variations for this option:

1) Fabric performance and smart readiness

2) Fabric performance and heating systems

3) Smart readiness and heating systems

Option 3 – There would be a requirement for landlords to upgrade the property and install any improvements that are listed on the EPC, regardless which metric they would improve. This would allow the most discretion for landlords to determine which improvement measures are most suitable for them and their property. 

Currently, landlords are required to spend £3,500 (inc. VAT) attempting to meet EPC ‘E’. The proposal under the previous government was to increase this to £10,000. Inflationary rises have been given as a reason why this most recent consultation proposes to increase the cost cap to £15,000. This cost cap would not automatically rise with inflation.

The cost cap exemption (officially known as the ‘all relevant improvements made’ exemption) lasts for five years, at which point it expires and further investment in the property must be made, or another exemption registered. Given the proposals to increase the cost cap to £15,000, this consultation proposes that the exemption would last for 10 years instead. This means that every 10 years, landlords would be required to spend up to £15,000 trying to reach the minimum standard. There are other exemptions available, which we will detail later.

The consultation proposes that expenditure on improvement works would count towards the cost cap from the date that the secondary legislation making changes to the MEES regulations is laid, which is predicted to be in 2026.

In our 2020 response to the original MEES consultation, the CLA recommended that the cost cap exemption should be variable based on the rental income of the property, to reflect the return on investment difference which would be achieved on different properties. This consultation takes a version of that idea forward and seeks views on a new affordability exemption, which could alter the maximum cost cap.

There are five options considered for the basis of a new affordability exemption:

1. An automatic lowering of the cost cap from £15,000 to £10,000 if the affordability exemption were triggered
2. A rent level-based approach – the cost cap would be set at a level determined by the rent charged
3. A Broad Rental Market Area (BRMA) approach (BRMA are used to determine maximum local housing allowance rates for an area based on number of bedrooms and location)
4. A council tax band-based approach
5. A local authority area-based approach

Similar to the ‘all relevant improvements made’ exemption (the cost cap), it is proposed that the affordability exemption would last for 10 years, at which point either more investment in the property would be required, or a new exemption would be registered.

The consultation seeks views on the existing exemptions and asks for suggestions of new exemptions to be introduced, or amendments to be made. The other existing exemptions are: ‘high cost’ (available if the cheapest works would cost more than the cost cap), wall insulation exemption, third party consent (e.g. from the tenant or local planning authority) and property devaluation.

The consultation does not specifically mention an exemption for listed buildings and buildings in conservation areas. However, the EPC consultation proposes requiring these buildings to have an EPC, which they are currently not required to have. This would bring them into the MEES regime. The CLA will be recommending in our response that a new exemption, specifically for heritage properties, be introduced to the MEES regulations.

The EPC consultation proposed that short-term lets, generally defined as properties occupied for less than 31 days, should be required to have an EPC at the point of occupation. Short-term lets are currently exempt from the requirement to have an EPC so long as the occupier is not responsible for meeting the cost of the energy. The current MEES regulations do not list properties occupied on a licence for a ‘short term’ as a relevant tenancy, and therefore even if they were required to have an EPC, they would not be required to meet the MEES. This consultation proposes bringing short-term lets occupied on a licence into scope, and requiring them to meet the new MEES of EPC ‘C’.

The main justification for this proposal is that the government is concerned that PRS landlords would convert PRS properties to short-term lets in order to avoid new MEES standards.

The UK Government is aware that some landlords have taken early action to meet EPC ‘C’ since the changes were first consulted on in 2020; the CLA knows of many members who fall into this category. The government wants to reward and encourage early action and therefore has proposed transitional arrangements for those who meet EPC ‘C’ based on the existing regime and metric. Those landlords who are compliant with EPC ‘C’ against existing metrics will be considered compliant until their certificate expires or is replaced by a new EPC.

Example - A landlord upgrades a property to ‘C’ in 2025 under the current regime, their EPC lasts for 10 years. They will therefore be considered compliant until 2035 (so long as the EPC is not replaced) and will not have to meet ‘C’ under the new regime by 2028 or 2030.

Landlords who are not compliant with EPC ‘C’ under the existing regime will be required to obtain a new certificate.

Example - A landlord has a ‘D’ rated property on an EPC commissioned in 2025. That EPC would have expired in 2035, but because of the requirements to demonstrate ‘C’ by 2030 for existing tenancies under the new regime, they will need to instruct a new EPC to demonstrate compliance by 2030.

The timeline for implementation of the new regime is that EPCs with the new metrics would be available from the second half of 2026.

The EPC consultation proposed making the expiry of an EPC a trigger event for instructing a new one. This would mean that in some cases, a landlord may be required to instruct a new EPC in 2026, which would include the new MEES metrics. However, because the new MEES regulations would not yet be in place (they come into force in 2028), the landlord would be required to demonstrate compliance with the old MEES. While there would be a cost metric on the new EPC, this would have been calculated using an entirely different methodology which in would mean the property was no longer compliant for the existing MEES (EPC ‘E), despite there being no changes to the property. In this scenario the government is proposing that an old, outdated EPC could be used to demonstrate compliance with the existing MEES until the landlord is required to be compliant with the new MEES.

We are aware that the proposals above will cause concern for many CLA members in England and Wales. If you have further questions about the proposals, please contact your CLA regional office in the first instance.

The CLA will be responding to the consultation by the deadline of the 2 May 2025, and will be consulting our Business and Rural Economy, and Policy Committee to inform our response.