The government is pushing back against claims that new Minimum Energy Efficiency Standards (MEES) are solely responsible for rising rents in the private rental market. Amid growing scrutiny over how these targets could impact affordability, ministers say a range of factors contribute to rent increases. Key among them are wider market forces and changes in regulation, not just energy efficiency standards.
Under the Warm Homes Plan, all privately rented properties must achieve an Energy Performance Certificate (EPC) rating of C by 2030. Green MP Hannah Spencer recently asked what assessment had been made regarding the impact of MEES on private rent inflation in a written parliamentary question.
In response, Martin McCluskey, Minister for energy consumer, said rental prices are not determined by one factor alone. He stated that alongside MEES regulations, other market factors would affect rents. McCluskey stressed the government's commitment to providing landlords with "regulatory certainty and advice" on upgrades and highlighted the Renters’ Rights Act, which allows tenants to challenge unreasonable rent increases.
A government consultation document acknowledges that some landlords might choose to exit the market rather than comply with updated EPC rules. Factors influencing these decisions include current profitability, upgrade costs, potential sale price, and a landlord's wider financial circumstances. The document notes that properties with lower EPC ratings (F/G) affected by regulations requiring an EPC E rating saw a decrease in value of approximately £5,000 to £9,000 relative to unaffected properties.
The consultation highlights scenarios where landlords might opt for upgrades and remain in the market or choose to sell instead. It also touches on potential compliance costs being passed on to tenants through higher rents, though lower energy bills resulting from improvements could offset this impact.