If you are a residential landlord, it is important that you are up to date with the energy performance requirements.
From 1 April 2018, the Energy Efficiency Regulations 2015 will require rented properties to have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). Non-compliance could lead to a fine of up to £4000, so it is important that landlords are ready for the changes.
Similar requirements will also be coming in for commercial landlords, which we will look at in a separate article.
Scope of the requirements
The requirements will apply to residential private rented properties in England and Wales. It will apply to all Assured Shorthold Tenancies (ASTs), as well as other types of domestic tenancy agreements.
Some buildings will be exempt from the regulations. These include some temporary buildings, properties that are intended to be used for less than four months of the year and particularly small buildings. Listed buildings and other buildings that are officially protected may also be exempt. However, this is only insofar as making changes to comply with the regulations would unacceptably alter the property’s character or appearance.
Prohibition on letting
Landlords will be prohibited from letting out a property with an EPC showing the property has an F or G rating. They must carry out energy efficiency improvements to bring the property up to at least an E rating.
The regulations only require landlords make appropriate, permissible and cost-effective improvements. Landlords will be eligible for an exemption from reaching the minimum standard where they can provide evidence that they qualify. Some of the exemptions are that:
- The landlord has carried out cost-effective improvements, but the rating remains below an E.
- The landlord requires consent, but the occupying tenant or freeholder withholds that consent.
- A suitably qualified, independent surveyor confirms that carrying out the improvements would cause the property value to decrease by over 5%. Any measures that are expected to cause such devaluation would be exempt.
Landlords need to register all exemptions in a national register. Failure to register the exemption will render it ineffective, and will amount to non-compliance with the regulations. The PRS Exemptions Register is planned to open on 1 October 2017.
Exemptions will last for five years. After this time, landlords will need to review to see if they are still effective.
The regulations will apply from 1 April 2018 on the granting of:
- A new tenancy to a new tenant; and
- A new tenancy to an existing tenant. This will include extensions or renewals to existing tenants. It is important to note that this includes statutory periodic tenancies that come into existence at the end of a fixed term AST.
From 1 April 2020, the regulations will apply to all privately rented property inside the regulations’ scope.
Local authorities will enforce compliance with the regulations.
Where a local authority suspects that a landlord has not complied or has not obtained an exemption, they can serve a compliance notice on the landlord. This will request further information considered necessary to confirm compliance. If the information is not provided, or is not sufficient to confirm compliance, a local authority may issue a penalty notice.
Individual penalties are up to £4,000, depending on the offence.
Landlords now have under a year to make any necessary improvements to their rental properties. If you have a lease coming to an end or are looking at renewing a tenancy, it is advisable to act now. Failure to do so could leave you unable to re-let your property, or liable for substantial fines.