In 2015, in the PRS Regulations, the Government introduced minimum energy efficiency standards (MEES) to improve the worst performing buildings in both the domestic and nondomestic stock. In October 2019, the Government consulted on proposals that would tighten the non-domestic MEES to set a long-term regulatory target of EPC B by 2030, or the highest EPC band a cost-effective package of measures could reach. This is an ambitious target, that will drive clean growth and reduce emissions across the non-domestic rental building stock.

The PRS Regulations were introduced, and will be strengthened, to ensure that landlords of non-domestic properties continue to invest in the quality of their buildings. Under the proposals set out in the 2019 consultation, around one million non-domestic buildings should be improved by 2030. This will deliver buildings which are cheaper to run for tenants, are responsible for fewer carbon emissions, and are closer to being able to accept low-carbon heating systems. As the UK battles to beat COVID-19, all of those benefits will allow the UK economy to build back greener, and to thrive, as we accelerate toward a net-zero future by 2050.

By consulting in 2019, the Government provided the industry with early sight of an upcoming future regulatory target. This was to ensure there was appropriate lead in time to enable investors, owners, landlords and tenants to plan and implement the required works as part of their normal tenancy cycles.

Based on the widespread support to the approach the Government set out in the consultation, the Government confirmed in the Energy White Paper that the future trajectory for the non-domestic MEES will be EPC B by 2030.1 This is estimated to cover around 85% of the non-domestic rented stock, deliver up to 10.3TWh in energy savings by 2030, and 4.1MtCO2e of carbon (non-traded) over Carbon Budget 5 (2028-2032).

A large number of respondents highlighted that, whilst the Government’s ambition is appropriate, there are significant implementation issues that should be addressed to enable the policy to be successful. This conclusion was supported by the Government’s pilot study, which ran from 2018-2019 and looked at how the enforcement of the PRS Regulations could be improved.

This consultation sets out proposals to improve the implementation and enforcement of the EPC B requirement.

The consultation looks at the need to:

  • Improve the implementation of the payback test and general enforcement of the PRS Regulations
  • improve how the PRS Regulations currently apply to older buildings and to premises rented in a shell and core state
  • better align the EPC requirements with the PRS Regulations
  • focus on operational performance
  • It also outlines the proposed new framework for implementing an EPC B trajectory to:
  • phase in the requirement with an interim milestone of EPC C in 2027 to ensure early action is taken by the market
  • introduce a compliance window approach designed to simplify compliance and enforcement
  • move away from enforcement at the point of let, and introducing a temporary 6-month exemption to address the challenges of compliance for shell and core premises
  • encouraging compliance by placing a requirement on letting agents and online property platforms to only advertise and let properties compliant with the PRS Regulations;
  • requiring landlords to provide an EPC prior to a property being advertised; and
  • introducing a property compliance and exemptions database
  • assisting local authority enforcement of the PRS Regulations through a number of proposals tightening exemptions by amending the validity period of exemptions to require a review at each compliance window, and introducing a standardised payback calculator to determine cost-effective measures
  • how smart meters could play a role in supporting landlords to meet the PRS Regulations as part of the next phase of smart meter rollout.

The Government is planning to publish the Government Response to this consultation, and the 2019 consultation later this year, and then lay amending regulations that would amend the PRS Regulations. The consultation on the scheme is ongoing and invites industry participants to submit their views on how the scheme should be amended.

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