Changes to legislation relating to Energy Performance Certificates (EPCs) will be implemented from 1st April 2018 and this could have a significant impact on landlords. All properties rented out in the private sector will be required to have a minimum energy performance rating of E. The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. It will become unlawful to rent a property which breaches these minimum standards, unless there is an applicable exemption. Civil penalties of up to £4000 are set to be imposed for breaches.
The Regulations apply to domestic private rented sector properties in England and Wales – this includes any properties let under an assured tenancy or a shorthold. Properties within scope will include any domestic privately rented property which: has an EPC, and is either (i) required to have an EPC; or (ii) is within a larger unit which itself is required to have an EPC, either at point of sale, or point of let. The EPC must be the current EPC if there is one and this must be no more than 10 years old.
A property is seen to be substandard if the EPC rating is F or G, unless an exemption applies. If there is an EPC in place which shows that the property has an F or G rating then it must not be let out or the landlord will be liable for penalties. Energy efficiency improvements must be carried out in order to bring the property up to the minimum E rating. It is left to the landlord to choose which works need to be carried out so long as the minimum E rating is obtained. Obviously there is nothing to stop a higher rating being achieved.
However, only appropriate and cost-effective improvements are required to be made. Landlords will be eligible for an exemption from reaching the minimum standard where they can provide evidence that they have undertaken cost-effective improvements but the energy efficiency of the property remains below an E rating.
There is a widely held view that all listed buildings are exempt from the need to obtain an EPC, even if they are sold or let out, however, the exact scope of this exemption is not clear and further clarification is needed.
If you would like more information on the regulations or are worried that your property may be in breach then please do not hesitate to contact us to discuss. Alternatively, please find more information on the Residential Landlords Association website https://www.rla.org.uk/landlord/guides/minimum-energy-efficiency-standards.shtml