The MEES requires owners of privately rented properties to achieve at least an E on the energy performance certificate (EPC) ahead of agreeing any new tenancy agreement.
This means properties with an EPC rating F or G cannot be let to new tenants or have existing tenancies extended until the rating is improved, with non-compliance carrying penalties which range from £4,000 to £150,000, depending on the tenancy term.
However, ARLA Propertymark figures have shown that hundreds of thousands of rental properties are still below the minimum E rating, meaning thousands of landlords risk facing hefty fines.
Liz Syms, chief executive officer of Connect for Intermediaries, said awareness is still low despite the looming deadline.
Syms commented: “We’ve been in a number of events and roadshows and talking about MEES, and there’s been a bit of publicity around it, but certainly not the amount around something like the tax changes.
“I think there’s still quite a lack of awareness in the wider market.”
Syms said that with the regulatory change, properties in the F or G bands will likely be deemed unlettable by mainstream lenders, such that landlords could face difficulties refinancing or finding loans to purchase new properties which have substandard ratings.
“If it’s not lettable legally, then of course it’s not affordable as a buy-to-let,” Syms continued. “It’s likely that most of the mainstream lenders will deem it as unlettable.
“If you’ve got a property yourself, or if your client has a property in the F-G band, now is the time to remortgage to get some funding for an upgrade.
“Only then will it be possible to stay in the mainstream market.”
However, Syms also said the transition may prove to be an opportunity for bridging lenders, and those looking to purchase properties at a discounted price.
“It could potentially create some opportunity for property investors who could pick up properties at a discount price if they don’t have the right rating, then renovate it to the standard themselves,” said Syms.
And in the case where a landlord caught unaware has to secure funding to upgrade their property’s energy ratings, they will be forced to go to bridging finance to secure the capital.
“If mainstream buy-to-let lenders won’t lend, the only option is to use bridging finance to do the work,” Syms continued.
“There’s a small window of opportunity for people to sort it out,” she added.