The Energy Efficiency Regulations, which came into effect in 2018, established a minimum level of energy efficiency for privately rented property in England and Wales.
This means that, from April 2018, rented properties must have a minimum Energy Performance Certificate (EPC) efficiency rating of E before a new tenancy can be granted to new or existing tenants.
Energy Performance Certificate efficiency ratings range from A (most efficient) to G (least efficient) and are valid for 10 years. Landlords must order an EPC for potential tenants before you market a property to rent.
Claire Tier, Joint Lettings Director at Davis Tate comments, "The environmental impact of homes is now a key focus for the Government as they seek to meet their obligations under the Kyoto Protocol and the Paris Agreement, so it is likely that this is only the beginning of legislation aimed at meeting these targets. I also think it is highly likely that we'll see the minimum energy rating increase from E to D at some point."
Here's the top 10 things landlords need to be aware of:
- If your rented property is still currently rated F or G, review your EPC as soon as possible. It indicated what changes you can make to increase the rating. You must ensure it either gains a minimum rating of 'E' or has a valid exemption before 01 April 2020
- You can apply for an EPC or retrieve an existing EPC at epcregister.com. Landlords who were already renting out properties with an EPC rating of less than E when the new legislation came into effect have until 1st April 2020 to make improvements to their properties and bring them up to the minimum standards required.
- The government has imposed a personal ‘spending cap’ of £3,500 (including VAT) for the cost of improvements. That means you don’t have to spend any more of your own money than this on works to bring a property up to an ‘E’ rating.
- If it would cost you, personally, more than £3,500 to bring an ‘F’ or ‘G’ rated property up to standard, you must simply do as much as possible for £3,500 and then register a ‘high cost’ exemption, but do seek advice on the work you do.
- If you have been able to secure third-party funding to help with the cost of making energy efficiency improvements (e.g. via a grant) this does not count towards the cap of £3,500, which only applies to your own personal spend.
- The ‘no cost to the landlord’ exemption has been discontinued. If you previously had an exemption registered because you were unable to fund energy efficiency improvements, this will end on 31st March 2020.
- It also used to be the case that if a sitting tenant withheld consent to a Green Deal finance plan, you could register an exemption on those grounds. This has now been removed, i.e. a tenant cannot refuse to permit necessary energy efficiency improvement works to be carried out.
These changes mean that you may now need to spend £3,500 on making improvements to bring your property up to (or approaching) standard, regardless of whether that is affordable for you.
- If you fail to comply, your local authority can fine you up to £5,000, which could be made up of various penalties, including:
- If you fail to comply with a council-issued compliance notice - a fine of up to £2,000
- If you have breached regulations for 3 months or more - a fine of up to £4,000
- If you enter false or misleading information on the PRS Exemptions Register - a financial penalty of up to £1,000
- The good news is that the likelihood of you having to pay out the full £3,500 is slim. According to Which? it costs an average of £1,200 to upgrade older properties to an EPC grade E.
- The average EPC rating for a home in the UK is 'D', so this requirement is certainly not unreasonable.
See ARLA Propertymark and .GOV.UK for full information.
If you have any questions, simply call into your local Davis Tate branch and one of the lettings team will be happy to discuss your options.