Energy Performance Certificates – be warned, they’ve got teeth
The days of Energy Performance Certificates being an afterthought are long gone. Landlords, or letting agents working on their behalf, can no longer afford to ignore them. The Energy Act 2011 has given EPCs teeth. It has given new duties to landlords and brought in penalties for non-compliance. But, as is often the case with new legislation, the measures have been phased in to allow those affected to be fully prepared. Even better, with these changes, both landlords and tenants should feel the benefit.
What’s happening and why
The UK Government has committed itself to a reduction in carbon emissions. Part of its strategy is to improve the energy efficiency of the UK’s housing stock. They have introduced measures that will make it illegal, in most cases, to let a property with an Energy Performance Certificate below rating ‘E’. With an estimated 400,000 privately rented domestic properties in England and Wales falling into this category, many landlords will be affected.
The EPC has become a critically important document. It’s now a legal requirement that one is commissioned before a property is marketed and must be completed before a tenancy is agreed. A copy must be given to the tenant. Since 1 April 2016, tenants have the right to request changes that will bring the rental property up to the band ‘E’ standard. And where a finance package is available to fund the assessor’s recommended works, landlords are no longer entitled to refuse to carry them out.
By 1 April 2018, all properties, domestic and commercial, must meet the ‘E’ rating or above before they are let. Any existing tenancies can continue but cannot be extended. Effectively a property that can and doesn’t reach the standard becomes unlettable.
More red tape?
Yes, and no. There are more rules but these new laws have benefits all around. While we are demanding that manufacturing and transport get greener and cleaner, inefficient homes are contributing to climate change. Our country has an ageing housing stock and, sadly, some of the worst performing properties in Europe. Huge numbers are living in fuel poverty, struggling to heat poorly-insulated homes or paying well over the odds just to keep warm.
If a tenant is struggling to pay for gas, they’re also likely to have difficulties finding the rent. But upgrading a property’s insulation isn’t just a short-term measure to appease a tenant or ensure the landlord’s income. It’s an investment that should improve the property’s market value. In addition, where there is a surplus of rental properties, those that cost less to heat are more desirable and can command higher rental incomes.
Most of the improvements recommended by EPC assessors to reach the required standards qualify for funding under schemes such as the Green Deal and Energy Company Obligations. The beauty of the current legislation is that it only requires a landlord to make the improvements where funding is available. Bringing a property portfolio up to 21st century standards has, with this legislation, become more affordable. What landlords are being asked to do may cause some short-term inconvenience, but it isn’t a huge burden and should benefit everyone in the longer term.
If you’d like to talk to us about the changes, please get in touch with our legal team. Call us anytime on 0333 577 9050.
