From 1st April 2018 new ‘Minimum Energy Efficiency Standards’ are being introduced so that all new tenanted properties should meet a minimum Energy Performance Rating.
When you come to sell or let a property in the UK, it is a legal requirement to have an Energy Performance Certificate (EPC) for the property when you begin marketing. However, there are changes about to be introduced for tenanted properties, in that from 1st April 2018, it will be unlawful to start a new tenancy at your property if the EPC Rating doesn’t meet the minimum ‘E’ standard.
The law will apply from April this year, but it will soon go further, in that the EPC Rating of all rented properties must be an E or better from April 2020.
Exemptions To The Regulations:
There may be circumstances where new tenancies are exempt from meeting the new regulations. Under the following circumstances, landlords can apply to the local council for an exemption:
- Third Party Consent:
If the tenant, a superior landlord or planning authority refuses to give their consent for the energy efficiency improvements to be carried out, or conditions are given which the landlord cannot comply to, then the Minimum Energy Efficiency Standard (MEES) regulations are waved.
The property is exempt from the MEES regulations should an independent surveyor establish that the required energy efficiency improvements, are likely to reduce the value of the property by more than 5%.
- The ‘Golden Rule’:
This applies to two instances: (1) Where an independent assessor has determined that all possible energy efficiency improvements have been made. (2) Possible improvements would not pay for themselves in seven years through energy savings.
- Listed Buildings:
Landlords can apply to the local authority’s Conservation Officer where improvements would unacceptably alter the character or appearance of a listed building. We cover exemptions for listed buildings in more detail in the section below.
What Should You Do As A Landlord, If Your Property Doesn’t Meet The Minimum Standard?
Unfortunately all new tenancies must comply with the law. However there are many things you can do as a landlord to improve the energy performance of your property and thereby meet or exceed the required minimum standard.
Curchods lettings can help assess your property and ensure it meets minimum requirements before a tenancy begins, so you comply with the regulations.
Examples of suggested improvements include:
- Replace any halogen or non-low energy light bulbs with Light Emitting Diodes (LEDs) or compact fluorescent light.
- Install roof insulation.
- Check your walls for cavities.
- Replace your old and inefficient boiler with a central heating system.
Any changes will inevitably cost money, but it could reduce running costs and also put you in a good position to comply with any future changes. If you are currently preparing a property for the start of a tenancy, ready our 7 Insider Tips To Help Landlords Make More Money.
What If You Can’t Afford To Make The Necessary Improvements?
Some landlords may feel they cannot or do not want to cover these costs. Fortunately there are alternatives to funding the necessary improvements.
No cost funding can come from a range of sources, primarily (but not limited to):
- Green Deal Finance
- ECO Help To Heat Funding
- Local Authorities Home Energy Efficiency Grants.
Penalties For Non-Compliance With New Lettings EPC Regulations:
As mentioned, if landlords choose not to do an upgrade and improve the rating of properties below the minimum standard, they may be hit with a penalty:
- Renting out a non-compliant property when the Landlord is less than three months in breach – Penalty up to £2,000.
- Three or more months in breach – Penalty up to £4,000.
- Providing false or misleading information to the RPS Exemptions Register – Penalty up to £1,000.
- Failure to action a Compliance Notice – Penalty up to £2,000.
There is a maximum penalty that applies to each property which is set at £5,000.
Guidance For Listed Buildings
Listed properties and buildings within a conservation area, will not necessarily be exempt from the requirement to have a valid EPC. It will be up to the owner of a listed building to understand whether or not their particular property is required to have an EPC.
Where a listed, privately rented domestic property, or a property within a conservation area is required to have an EPC, that property will be within scope of the Minimum Energy Efficiency Standard and will need to be compliant. Complying means either being at a minimum of EPC band E, or having a valid exemption. Many of the recommended in an EPC report e.g. double glazing, new doors and windows, external wall insulation and external boiler flues, would likely result in unacceptable alterations in the majority of historic buildings – in which case may qualify for an exemption.
If there is any doubt as to whether works would unacceptably alter the character or appearance of a building, the owners may wish to seek the advice of their Local Authority’s Conservation Officer.
CASE STUDY: Elm Lodge, Weybridge
We recently had the pleasure of marketing this Grade II Listed, five bedroom house in Weybridge, Surrey. The property dates back some 300 years, but it had recently been refurbished throughout. To begin advertising the property, we were required to arrange an EPC. However the homeowner was aware that some work was needed to ensure that it complied with the minimum EPC Rating ‘E’.
As mentioned previously in this article, the boiler was changed as it is one of the most common ways to increase the rating. Next the entire loft was insulted with Celetex and the Victorian section of the house was Triso Super 10 insulated. Lastly the owners replaced the roof on the property.
The improvements we suggested, resulted in the property achieving a rating of 65 which is a high ‘D’ – this meant we could let the property.
All the improvements will be beneficial to the landlord in the long term and helpful to the tenants in the short term by reducing energy bills.
If you’re a landlord, what do you think? Do you know the EPC rating of your property? How do you think the new regulations will affect you? Let us know in the comments below…