30 April 2018
How the new energy efficiency standards might affect landlords
Are you a landlord with a property in England or Wales that has an energy performance certificate (EPC) rating of F or G? Then this article could save you a fine of up to £5,000.
In 2015, the Energy Efficiency (Private Rented Property) Regulations established a minimum EPC of E for private rented properties in England and Wales.
The government’s new Minimum Energy Efficiency Standards (MEES) now give real teeth to this.
New Legal Deadlines
From 1st April 2018, landlords are forbidden from offering new rentals – to either new or existing tenants – on properties with an EPC below E. This applies to domestic and non- domestic tenancies, to extensions or renewals of existing tenancies and also to any tenancy that becomes a statutory periodic tenancy at the end of a fixed term shorthold.
This restriction will then be extended to all currently existing tenancies of private rented property – for domestic properties from 1st April 2020 and for non-domestic properties from 1st April 2023.
However, there are a few exemptions to the new rules. For these to be deemed valid, landlords must formally register them on the Government’s PRS Exemptions Register. Key exemptions include:
- If the landlord has undertaken ‘all relevant energy efficiency improvements’ but the property is still rated F or G.
- If consent for improvements is required from the tenants, but they withhold it.
- If third party consent is required for the improvements but this cannot be obtained (for example: planning permission).
- If the landlord has a written opinion from an expert in wall insulation advising that this is not a sensible improvement because of its potential impact on the structure of the building.
- If the necessary improvement works are shown by a qualified independent surveyor to be likely to devalue the property by more than 5%. However, only those works likely to cause the devaluation will be exempted.
- If the landlord has only recently taken over the property.
Each exemption registered on the PRS Register is valid for five years – except where the landlord has recently taken over the property, in which case the exemption is valid for six months only. Also, where a tenant has withheld consent for improvements, the exemption is valid for five years or until the tenancy ends – whichever is the earlier.
Finally, an exemption cannot be passed on to a new landlord on sale. Instead, the exemption ceases to be valid and the new owner must either improve the property to the EPC standard or re-apply for the exemption.
Fines for Non-Compliance
Beware – if you do not comply with the new standards there are penalties of up to £5,000.
If it all sounds rather complicated, there is no need to worry. Centor’s experts will be happy to talk you through the issues. For more information, please contact:
Property Division Manager
020 7330 8729