EPCs and MEES: a farmhouse-shaped hole in the law

The law on how the Energy Performance Certificates (EPCs) and Minimum Energy Efficiency Standards (MEES) regulations apply to farmhouses is complicated and unclear, but it is an important issue for rural landlords. Given the Government’s net zero trajectory, requirements concerning the energy efficiency of buildings are only going in one direction: September 2024 saw one of the first enforcement cases for breach of MEES and it seems likely that the current EPC minimum standard of E will rise to C by 2030. As it is likely that few farmhouses would achieve an E or above without work, rural estates may want to review their properties now to spot potential problem areas and plan for the future.

From 1 October 2008, the EPC Regulations required the relevant person (here, the landlord) to make a valid EPC available to prospective tenants or purchasers, free of charge, when a property is marketed, sold or “rented out” (also on construction). Some limited types of property, such as those with a low energy demand, are excluded from the need to have an EPC, which leads to the first question.

The farmhouse is listed, isn’t it exempt?

The point to remember is that listed buildings are not automatically exempt and may need an EPC. The EPC Regulations are nuanced (probably because they hail directly from European law, which does not have the concept of a listed building) and state that where compliance with certain minimum energy performance standards “would unacceptably alter [the] character or appearance” of “buildings officially protected as part of a designated environment or because of their special architectural or historical merit”, then they do not need an EPC. In theory, therefore, a listed building needs an EPC if there are changes that could be made to it to improve its energy efficiency, but only where those changes would not unacceptably alter its character or appearance. In practice, the safe course of action may be to obtain a (draft) EPC as evidence that none of the changes could be carried out without unacceptably altering the building’s character or appearance. If, however, there are changes that can be carried out, then an EPC is required and the changes must be carried out.

Assuming your property is not exempt from needing an EPC, the next question is:

Has there been a trigger event?

The EPC Regulations state that an EPC is required when property is “rented out” after 1 October 2008, but do not define what is meant by “rented out”. Clearly, that must include any new tenancy, but it is not clear whether renewals, assignments or successions of (pre-1 October 2008) tenancies made after that date will also act as triggers.

• Renewals and extensions: although not mentioned in the EPC Regulations, the Government’s guidance on EPCs for both dwellings and non-dwellings sets out a list of things it does not consider to be sales or lets. That list includes renewals and extensions, as well as surrenders. Admittedly the Government’s guidance does not have legal status, and if one were being very cautious, one might choose not to rely on it for that reason – however, it is entirely reasonable to rely on it.
• Successions: where the tenancy is made under the Agricultural Holdings Act 1986 (1986 Act) there is the trickier question of whether post-1 October 2008 succession events will trigger the need to obtain an EPC. The guidance is, perhaps unsurprisingly, silent on this point. Successions are different from renewals and extensions in the sense that there is a different tenant. The underlying European legislation refers to EPCs being made available to “new tenants”, which may indicate that it is having a “new” tenant (rather than a new tenancy) that triggers the need to obtain an EPC. On the other hand, a succession is far from an open market letting; the so-called “new” tenant will necessarily already have a connection with the holding and a close relationship with the outgoing tenant (and will not be choosing between a host of available properties). Ultimately, different situations may lean towards different interpretations and should each be scrutinised on their own facts.

Where an EPC is not (or not yet) required for a farmhouse, then it will not be subject to MEES – the definitions for both domestic and non-domestic properties exclude property for which an EPC is not required. But where an EPC is required, the next question is whether MEES applies and which regime.

Are farmhouses domestic?

The MEES Regulations require property that is privately rented to have an EPC of at least E (or a registered exemption) and are split into two parts, “domestic” and “non-domestic”. This creates a problem. “Domestic” property includes only those properties let on certain, named tenancy types and these do not include 1986 Act tenancies or farm business tenancies. By a 2015 Order, assured agricultural occupancies and tenancies under the Rent (Agriculture) Act (referred to as “domestic agricultural tenancies”) were specifically added to the list, but are unlikely to be relevant to the farmhouse itself. The definition of non-domestic property, on the other hand, specifically excludes dwellings – and farmhouses are nothing if not dwellings.

Here, the Government’s guidance is unenlightening. It does not refer to farmhouses at all, and where it talks about mixed-use properties let as a single unit, it advises merely that the landlord should “examine the tenancy to determine whether the property is domestic or non-domestic”. The safe option, therefore, may be to interpret the spirit of the law rather than the letter of it and assume that farmhouses for which EPCs are required will be caught by MEES. After all, they are privately rented properties, let as an individual’s home, the energy performance of which will be relevant to the tenant who is paying the bills. Although it would not be impossible to seek to rely on the gap in the definitions and argue that farmhouses fall outside the MEES regime entirely, the wording could well be tightened in the future.

Does a voluntary EPC change things?

The Government’s guidance states that where a voluntary EPC has been obtained and even registered (perhaps because the owner was unsure whether one was needed), that will not, by itself, require the landlord to comply with MEES. That said, it probably looks somewhat inconsistent to obtain a voluntary EPC and then seek to argue that one is not required.

What now?

Assuming farmhouses come under the domestic MEES regime (if at all), there are a number of exemptions which might assist. The most frequently used is the “high cost” exemption. This requires the landlord to carry out “only” £3,500 worth of work, but where the property remains below E, the landlord can then register an exemption. There has, however, been discussion of raising this cap to £10,000, which may make this exemption a considerably less practical option for estates.

Ultimately, it is likely to take a court case, or a change to the current law, to resolve the grey areas. In the meantime, it may be useful for estates to audit their properties to see where their own questions lie. They might also consider formulating some general guidelines on how to deal with these situations (perhaps in discussion with the local authority, if at all possible), taking into account not just what is reasonable and practical for them to do given their portfolio and resources, but also their own attitude to risk.

This article is part of the Rural Estates Newsletter 2025, click here to read.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, February 2025