The UK government has published a consultation, which is open until 2 May 2025, seeking views on its proposal to raise the minimum energy efficiency standards (MEES) for the private rented sector in England and Wales. This consultation is hot on the heels of a government consultation, which is open until 26 February 2025, on reforms to the Energy Performance of Buildings (EPB) framework including new metrics and requirements for Energy Performance Certificates (EPCs).
EPCs are a key, albeit imperfect, measurement tool for assessing the energy performance of buildings and are used as the basis for energy efficiency targets, including for MEES in the private rented sector.
Currently, all privately rented homes in England and Wales are required to have an EPC rated Band E or better before they can be let, unless there is a valid exemption. The government proposes raising this minimum requirement to the equivalent of Band C by 2030, alongside implementing various technical changes to EPCs to make them more robust and incentivise energy efficiency improvements being taken to reduce carbon across the built environment.
The consultations are of particular interest to investors in the private rented sector and single-family housing, who will need to consider how the more extensive requirements will impact their existing portfolios and identify what, if any, energy retrofitting will be required to bring them up to the new standard to avoid their portfolios being subject to brown discounting. Investors will also need to incorporate the proposed new standard into their benchmarks against which potential acquisitions are evaluated and, if portfolios do not meet the new minimum standards, the scope required to bring them to meet the standard should be quantified and factored into the acquisition process.
You can read our Real Estate Team's detailed analysis on the impacts of the proposals on HSF Real Estate Development Notes here.
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