It is hard at the moment to avoid reading about the Minimum Energy Efficiency Standards (MEES) regulations, as laid down in the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. One reason for this is that since 1 April, the MEES regulations have prevented landlords from continuing to let substandard commercial property.
However, the regulations are not new, with landlords forbidden to grant leases of substandard properties from 1 April 2018. Since then, landlords who breach the regulations have been liable to enforcement measures – but there has been a notable lack of action against them.
Under the enforcement regime, financial penalties are triggered for various breaches of the MEES regulations.
First, there is a mechanism that allows an enforcement authority – the local authority – to serve a compliance notice where the landlord appears to be, or to have been at any time within the 12 months beforehand, in breach of MEES regulation 27.
For the purposes of regulation 27, a breach means the landlord has granted a lease of a substandard property on or after 1 April 2018, or is continuing to let such a property on or after 1 April this year, without a valid exemption. Substandard in this context means a property that has an energy performance certificate (EPC) rating below an E.
Second, under MEES regulation 38, the enforcement authority has the power to issue a penalty notice where it is satisfied that a landlord is, or has in the preceding 18 months:
The fines themselves are as follows.
Third, the enforcement authority can also issue a publication penalty, which effectively involves publishing certain information relating to a penalty notice on the exemptions register. This includes the name of the landlord where it is a company, details of the breach and the amount of the financial penalty imposed. This is intended to act as a further discouragement for committing a breach.
A landlord could be subject to multiple fines, for instance for breaching regulations 27, 37(4)(a) and 36(2), as well as being subject to a publication penalty. A breach of the MEES regulations could therefore be very costly for a landlord.
It is also worth mentioning that any financial penalty can be recovered as a debt by the enforcement authority, which gives it an incentive to take action for breaches of the MEES regulations.
The lack of enforcement action against breaches of the MEES regulations is prompting questions. In the London Assembly, for example, Mayor of London Sadiq Khan has been asked about the regulations' effectiveness.
So, why is there a lack of enforcement? An important point to make is that in many instances, local authorities have very little idea that breaches are being committed, because these are not necessarily obvious. There is not, for example, an absolute requirement for a landlord to have an EPC; for instance, where the existing certificate expires and the property is vacant.
This means that unless a tenant complains that the property does not have an EPC, or that it is in such a state of disrepair that there is a fair chance it is in breach, the situation is unlikely to come to the local authority's attention.
Another key reason for the lack of enforcement is rather obvious: local authorities are severely overstretched. In response to a question put to him last year, the mayor of London said that 'to improve borough enforcement [he] commissioned training on MEES legislation at the end of 2020 attended by 11 boroughs'.
But clearly, the lack of training is not the primary issue. Many local authorities simply do not have the resources available to dedicate time and money to properly enforcing the regulations. This is apparent from the mayor of London's response to the Department for Business, Energy and Industrial Strategy's 2019 consultation on the MEES regulations, in which it was confirmed that no MEES penalties had, at that time, been issued in London due to a 'lack of resources and lack of prioritisation of energy issues'.
'Many local authorities simply do not have the resources available to dedicate time and money to properly enforcing the regulations'
One obvious solution would be for additional funding for local authorities, ringfenced for enforcing the regulations. However, that doesn't deal with the difficulty that local authorities, even if well-funded, have in identifying properties that may be let in breach of the regulations.
That is not to say it couldn't be done. In June 2019, the government's Committee on Fuel Poverty commissioned a study on enforcement of the regulations. Among the ways to improve enforcement, it proposed giving incentives to tenants to report breaches, so they 'could be compensated financially from landlords' failure to comply'. Another option put forward was to look at mandatory registration and licensing for all private rented properties, to help identify landlords lacking a valid EPC on a proactive basis.
None of the committee's proposals have been implemented, so as matters stand we have a two-tier system: well-advised, reputable landlords comply with the MEES regulations, and also maximise use of the relevant exemptions, while less reputable landlords flout the rules with a fair degree of impunity.
However, in a world where environmental concerns are being pushed higher and higher up the agendas of private and public institutions, this may be an area where the government starts to feel pressure to look at alternative enforcement regimes. We can only wait and see.