We have seen an increase in enquiries lately from our landowning client base with residential letting property portfolios questioning whether properties with ‘Listed’ status are exempt from EPC rating requirements and MEES. The answer is no, not always – read on to find out when ‘Listed’ properties will be caught.
It is often assumed that if a building is listed, a blanket exemption to the EPC requirements applies, but the Energy Performance of Buildings (England and Wales) Regulations 2012 do not give a blanket exclusion. Instead, Regulation 5(1)(a) applies the exemption only to:
“buildings officially protected as part of a designated environment or because of their special architectural or historical merit, in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance.”
Additionally, the introduction of the Domestic Minimum Energy Efficiency Standard (MEES) Regulations mean that since 1st Aril 2020, landlords can no longer let or continue to let properties covered by the MEES Regulations if they have an EPC rating below E, unless they have a valid exemption in place.
The Government Domestic Minimum Energy Efficiency (“MEES”) Guidance (first published in October 2017) and Non-domestic MEES Guidance (first published in February 2017) both state that it is a “common misunderstanding” that listed buildings are always exempt from the requirement for an EPC.
When are listed buildings exempt?
In 2020 the MEES Guidance was updated, and now proves a little more helpful, but, still, the answer is not definitive. The Guidance points out that, often, the recommendations found in an EPC report would likely result in unacceptable alterations to historic buildings (it gives some helpful examples, perhaps the most obvious being the installation of double glazing).
The advice in the Guidance is that building owners should “take a view” on whether carrying out improvement works to meet minimum energy performance requirements would result in unacceptable alterations to the appearance of the building. If the conclusion is that no EPC is required, then the minimum energy efficiency standards do not need to be met, and it is not necessary to register an exemption.
If however the building owner concludes that improvements could be made that would not result in unacceptable alterations to the appearance of the building, then an EPC will be required. The property must then comply with the relevant energy efficient standards. Compliance means either having:
- the requisite EPC rating (as at May 2023 the required rating is E); or
- a valid exemption.
Valid exemptions are:
- the property is still below EPC E after improvements have been made (or there are none that can be made);
- no improvement can be made because the cost would exceed £3,500 (inc. VAT);
- if the only relevant improvements for the property are wall insulation (cavity, external or internal). If this exemption is claimed then a written expert report must be commissioned, confirming that the insulation would negatively impact the fabric or structure of the property;
- if the relevant improvements for the property need consent from another party, such as a tenant, mortgagee, or planning department, and the consent cannot be obtained or was given subject to conditions that cannot reasonably be complied with;
- if a report from an independent surveyor who is a member of the Royal Institute of Chartered Surveyors (RICS) advises that the improvement works would reduce the market value of the property by more than 5%; and
- under certain circumstances, a-six month exemption can also be claimed if you have recently become a landlord of the property.
Such exemptions must be registered on the PRS Exemptions Register (Guidance on PRS exemptions and Exemptions Register evidence requirements), and it is worth bearing in mind that exemptions are only valid for certain time periods, depending on the exemption claimed. Exemptions can only be registered once an EPC is in place for the property.
Can Local Authorities issue penalties?
Penalties can be issued by Local Authorities who find landlords in breach of the MEES Regulations, and so the advice to “take a view” will not be helpful for landlords that want certainty. The Guidance suggests that, when in doubt, property owners seek the advice of their local conservation officer. Yet still, that may not be definitive. So, despite the cost and time implications, the safest option for a landlord of a listed property may be to commission an EPC prior to letting the property, and, if the rating returned is too low, to register one of the valid exemptions.
How Moore Barlow can help
As ever, please do reach out to our Rural Property team who are well versed at advising on listed buildings.
Recognised as one of the leading rural services teams in the south, we have a deep understanding of every aspect of rural life. Having advised many clients over generations, we are experienced in dealing with all issues that can arise.