HOLIDAY lets have been spared stringent rules on energy savings with those in the industry hailing the “fantastic news” while residential landlords bemoan the exemption as unfair.
Short-term rental and self-catering accommodation will be excluded from the Minimum Energy Efficiency Standards (MEES) scheme, meaning owners will not be required to achieve a minimum Energy Performance Certificate (EPC) rating of C in order to continue trading.
The proposal had also included a requirement for owners to spend up to £15,000 attempting to reach EPC C, even where improvements were impractical — a threshold that has now been dropped.
Properties in this sector will still require a valid EPC, but no minimum rating will apply.
Conversely, residential landlords will be forced to upgrade their properties to at least a EPC score of C by 2030 in a “bitter pill for landlords to swallow”, it was revealed in the Government’s Warm Homes Plan.
Those in the holiday let industry claim MEES was designed to address fuel poverty, an issue linked to long-term residential housing and not present in the short-term accommodation sector.
Fantastic news
Kate Allen, Owner at Kingsbridge-based Finest Stays, hailed the news as “fantastic”.
She added: “This is genuinely fantastic news, and a decision I wholeheartedly support. Applying the same rules to holiday lets risked unnecessary cost, reduced supply, and yet more pressure on tourism-dependent areas.
“This provides much-needed clarity and avoids piling disproportionate regulation onto a sector already facing significant headwinds – increased National Insurance, higher tax on property income, DAC7 reporting, potential mansion tax changes, Making Tax Digital, rising business rates, the abolition of FHLs, council tax premiums, incoming statutory registration and the prospect of a tourist levy.
“Had this gone the other way, it could quite realistically have been the straw that broke the holiday-letting sector’s back.”
The right decision
Joe Stallard, Director and Advisor at Devizes-based House and Holiday Home Mortgages, said he believes the exemption for holiday lets is the right decision.
He continued: “Excluding holiday lets from the MEES scheme the right decision and is frankly some overdue good news for a sector that adds billions in Gross Value Added (GVA) to the UK economy. Holiday accommodation isn’t linked to fuel poverty in the way long-term housing is, so applying the same rules never felt like the right call.
“Exempting the EPC C requirement and the £15,000 spend takes away a huge amount of uncertainty and gives owners confidence to keep operating in a time where increasing regulation and rising costs can already be seen to be taking a toll.
“Guests still care most about comfort and location, but energy efficiency will matter more over time. By removing these requirements, owners can now improve sensibly, rather than under pressure.”
I’m facing a bill of up to £10,000
Kundan Bhaduri, landlord at London-based The Kushman Group, said it was unfair to hit residential landlords.
He added: “If I own a Victorian terrace with an EPC rating of D, which is the median for English housing stock, I am now facing a bill of up to £10,000 to upgrade it for a long-term tenant. That is ten thousand pounds of dead capital that yields zero additional rent because the market ceiling is determined by local wages, not by how thick your loft insulation is.
“However, if I evict that family and put the same drafty property on Airbnb, my compliance cost is zero. If the policy were truly about Net Zero, then carbon emissions should matter regardless of whether the person turning up the thermostat is a nurse doing a twelve-hour shift or a weekender on a stag do. In fact, holidaymakers typically consume more energy per day than residents because they have no financial incentive to turn the heating down.
“By exempting short-term lets, the government has admitted that their green agenda is secondary to their desire to socially engineer the private rented sector.”
Photo by Ifeoluwa B. on Unsplash.
