Energy efficiency & compliance - what you need to know

Energy Performance Certificate

In January, we reported on new UK Government regulations that would require landlords to make their rental properties more energy efficient. While the regulations will go live in April this year, the government has outlined a basic structure for the order of events. By April 2018, it will be unlawful for landlords to let a property with an Energy Performance Certificate (EPC) of F or G when registering a new let, and from April 2020 it will be required that all rental properties (not only new lets) have a minimum energy efficiency rating of E. These targets will then be increased intermittently, with a minimum of D rating as the goal by 2025 and a minimum of C required by 2030.

New details about the regulations have been released in order to clarify some of the more ambiguous aspects of the law change.

Tenants can have a say

Though the new regulation suggests that it is up to landlords to decide when they improve the energy standards of their properties - as long as they achieve it by the stipulated deadline - tenants will actually be able to play a larger role in encouraging landlords to make improvements prior to the deadlines.

Indeed, under The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, from 1st April 2016 a tenant will be able to request relevant efficiency improvements, assuming the request is reasonable.

A request for improvement is considered reasonable if:

  • It can be wholly financed by funding from a local authority, central government or a third party without it incurring any costs to the landlord;
  • Can be financed entirely by the tenant; or
  • Can be financed by combining both of the above methods.

Of course, a landlord will be able to fund improvements if they so wish.

To begin the process, the tenant should first submit their request in writing to their landlord, outlining what they wish to do to the property, and how they plan on funding these improvements. The landlord is only able to refuse consent on a limited ground, including if the works would reduce the property’s market value by more than 5% or if a third party has refused consent for the project.

After a written request has been submitted, the landlord has a month to return an “initial response”. There will be provisions available for requests where consent is required from a superior landlord, and landlords are free to serve a “counter proposal” which outlines one or more alternatives to a tenant’s request.

If there is a dispute between the landlord and tenant then an application can be made to the First-tier Tribunal which will aim to resolve these issues.

A minimum level of energy efficiency

While all properties will be required to attain the minimum energy efficiency rating outlined above, there are a number of exemptions that have been proposed. These exemptions are when it isn’t possible for the property to be brought up to standard, when the tenant refuses consent to have any necessary work done on the property, when the landlord is unable to obtain consent for work from a third party, or if the works required to bring the property to the necessary energy efficiency rating would devalue the property by more than 5%.

Concerns over banding

Despite the general consensus that this regulation is a good step forward for both landlords and tenants, there have been some concerns raised by the Residential Landlords Association (RLA) that the EPC bandings aren’t entirely accurate.

It is estimated that 100,000 properties have been incorrectly banded in the F and G categories, which could have a negative impact on landlords further down the line if they are unaware of this. The RLA continue to lobby that EPCs be accurate across the board before compulsion for all landlords is introduced in 2020.

Penalties

When the regulation is in play there will be penalties enforced to ensure that a landlord fulfils their duty; this includes a fine of £5,000 for domestic properties that don’t reach the minimum standard, or a larger fine for non-domestic properties dependant on size. It should be noted that tenancy agreements will remain valid between landlord and tenant even if the property does not meet regulation requirements.

If you are a landlord looking for a property management service in Cardiff, or if you want some advice on property redevelopment and improvements, then get in touch with us here at CPS Homes, where our dedicated team will work tirelessly to get you the best tenants for your property. Contact us today for more information.

23 March 2016

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