Minimum Energy Efficiency Standards (MEES) are UK regulations (primarily in England and Wales) that set a minimum energy performance level for privately rented properties. The core principle in MEES regulations.
Fabric First prioritises improving the building’s physical envelope (its “fabric”) — the walls, roof, floors, windows, doors, insulation, airtightness, and ventilation — before (or in preference to) upgrading heating systems, installing renewables, or adding smart technologies.
For property investors, the biggest mistake is to think MEES is simply about getting a new EPC certificate. The real issue is some properties are commercially or technically unviable to upgrade because of the capital expenditure required to improve older housing stock and the implications and opportunities of the legalisation on property investment decisions.
However, in the future, MEES is tightening significantly, because of HEM = the future way EPCs (and therefore MEES compliance) will be measured. It’s a big shift that will affect how easy or hard it is for landlords to meet the upcoming EPC C requirement.
- Current minimum: EPC E (already in force). Future minimum: EPC C by 1 October 2030
- Future minimum: EPC C by 1 October 2030
Under HEM: A–G rating is being replaced by multiple metrics (typically four), including:
- Fabric Performance (mandatory – how well the building retains heat).
- Heating System or Smart Readiness (landlord choice for the second metric in many proposals).
This will make compliance more challenging for some older properties, especially those with gas boilers or hard-to-insulate fabric.
Key Requirements
Properties must achieve a minimum EPC (Energy Performance Certificate) rating of E (on a scale from A to G, where A is most efficient). It is unlawful for landlords to let or continue letting a property below this standard (EPC F or G), unless a valid exemption applies.
Landlords in the PRS can register exemptions in certain cases, such as:
- Where improvements would never be cost-effective
- Structurally impossibility or risk of damaging or devaluing the property
- Listed buildings or other specific circumstances. Exemptions are time-limited and must be registered on the PRS Exemptions Register
There is a specific Property Devaluation Exemption Improvement where works would reduce the market value of the property (or the building it’s part of) by more than 5%, but this Requires a report from an independent RICS-registered valuer/surveyor.
Fortunately the Government has taken a common sense approach and the legalisation is designed to exclude properties with very high improvement costs relative to potential energy savings. In other words – if it’s not financially viable to undertake improvement works and you can prove this – then your property could be excluded depending on the type of property and where it’s located like in certain areas such as a conservation area for example.
What are the challenges for investors as a result of MEES?
AS a developer and I am looking to buy “EPC Problem Properties” at a Discount, but it’s not as simple as that as some properties will always be a challenge to improve their EPC which on a practical level means these properties will be very expensive to heat for tenants. If there is no solution to reduce the heating bill, particularly with properties with high ceilings, large Georgian and Victorian style very large windows where the latest standards are not possible to install then these properties are the ones to avoid in my view. A property which is expensive to heat will be less desirable to tenants and more expensive to finance as lenders charge more for lower rating EPC properties.
The biggest challenge is that most Georgian and Victorian houses were built with solid brick or stone walls rather than cavity walls, upgrades are sometimes not practical. Internal wall insulation is also a challenge due the reduction in space and changes degrading the building where a property would have existing features, historic coving poses a major challenge with Internal Wall Insulation Insulating walls internally destroys or damages original plaster cornices and often traps moisture. Adding thick thermal insulation to the interior walls shifts the wall’s dimensions. This buries or requires the removal of the decorative ceiling rose and Victorian coving.
From an EPC perspective, original sash windows for example are difficult to replace owners therefore use secondary glazing instead, but this doesn’t always produce the same EPC gains and is unattractive and can even devalues a property.
The best option is to focus on insulating the floorboards and the loft instead of internal walls, but this doesn’t work very well as the heat escapes through the windows or doesn’t hold in heat well because of high ceilings associated with Georgian or Victorian houses.
From a property investment point of view, I am avoiding Georgian or Victorian houses properties because of the challenge in retrofitting and the potential extra costs financing a mortgage of a poor rating ECP property. Even if prices are cheaper, fundamentally they will be expensive to heat and less attractive for tenants.
What are the opportunities of MEES for investors?
As someone who has completed many C2R developments, I believe Commercial-to-residential (C2R) conversions present opportunities for developers and property investors in the context of MEES regulations. Conversions allow investors to “reset” the asset from a struggling commercial EPC trajectory to a residential one with a high EPC rating often via Class MA Permitted Development Rights (prior approval route) for faster, lower-risk delivery. Class MA is a change of use from Class E commercial premises to C3 residential.
You can incorporate energy efficiency measures from the ground up (or during major works), which is easier/cheaper to hit EPC C (and potentially higher) under the new HEM compared to retrofitting assuming you are doing a “back to brick” refurbishment.
I have converted many commercial buildings over the decades and my favourite has been large pub where I have developed two old pubs which gave me a total of 39 rooms on just two buildings alone. My plan going forward is to target more C2R buildings where I can add more compliant, modern residential units appealing to tenants seeking lower energy bills, which ultimately support premium rents and future-proof your portfolio.
My objective is always to find a building where I can design boutique hotel style rooms either for HMOs or apartments and to reduce tenant retention and have warmer cheaper to heat building and doing a “back to brick” C2R development is ideal for this because of the easier planning via Permitted Development, plus commercial property is often cheaper to purchase per sq meter than and equivalent sized residential property. Given I am effectively looking for a shell property to complete a “back to brick” conversion, I am looking to buy the ‘shell as cheaply as possible and C2R always make the numbers work better than buying a straight residential property.
Commercial-to-residential conversions or retrofits, adopting a fabric-first strategy during the works is easier and more effective to do major fabric upgrades while the building is stripped out.
