As a landlord, you will be aware of the requirement for an Energy Performance Certificate (EPC), which ranks a property from A-G in terms of energy efficiency. This document demonstrates how efficiently a property uses energy, and where this can be improved.
The rules regarding your EPC are changing significantly. From 1 April 2018, it will be unlawful to let or lease a residential or commercial property with a poor EPC rating, and you won’t be able to get a mortgage.
What are the new rules and when do they come into place?
The regulations will come into force for new lets and renewals on tenancies with effect from 1 April 2018, and will prohibit the letting of properties with an EPC rating lower than E.
From 1 April 2020, this will also apply to continuing tenancies which are already in existence on that date, if there is a legal requirement for the property to have an EPC. The property must therefore be bought up to a minimum E rating before 1 April 2020 in order to comply with regulations.
Following the enforcement of these regulations, anyone letting residential and commercial properties with an EPC rating lower than E could be subject to strict penalties. A civil penalty of up to £4,000 will be imposed for breaches.
What are the exemptions?
The majority of landlords will no longer be able to rent out a property with an EPC rating of F or G after 1 April 2018. However, there are several exceptions to this regulation and they include the following;
- The landlord has undertaken cost-effective improvements but the property remains below an EPC rating of E. As currently defined cost-effective measures are those improvements that are capable of being installed within the Green Deal’s Golden Rule.
- The landlord requires consent to make improvements, and the occupying tenant withholds that consent. It should be noted that you need to check the tenancy agreement, as a tenant’s consent may not be required to carry out improvements.
- It has been determined by a suitably qualified independent surveyor that measures required to improve the property are expected to cause a capital devaluation of the property of more than 5%.
- A landlord will not be required to install wall insulation under the regulations if they have obtained a written opinion from a suitably qualified person, advising that it is not an appropriate improvement due to its potential negative impact on the fabric or structure of the property.
It will be required that all exemptions are notified to the PRS Exemptions Register, which will be operated by the government. It is planned that this will open from 1 October 2017 and will be a database of exemptions, open to public inspection. If you fail to register an exemption, it will be ineffective and result in non-compliance with the regulations.
How can I meet the new requirements?
Landlords with properties with an EPC rating lower than E should begin preparing for 1 April now. As long as the E rating is achieved, it is down to the landlord to decide which work should be carried out.
There are many improvements a landlord can make that comply with the Minimum Energy Efficiency Standards. They include the following;
- Thermostat boilers
- Thermostat room heaters
- External wall insulation systems
- Duct insulation
- Roof insulation
- Air source heat pumps
- Heating ventilation and air conditioning controls
- Hot water taps (efficient)
- Secondary glazing
- Gas fired condensing boilers
- Under floor heating
- Draught proofing
- Water source heat pumps
Many landlords may not have been aware of plans to change energy efficiency requirements, and in turn have not got the funds to pay upfront for improvements to their properties.
There is, however, a simple way of reducing your outgoings. Property Master will allow you to re-mortgage your property, using sophisticated algorithms to search the whole of the market. Your details will be accurately matched to the criteria and availability of all UK lenders, meaning you are presented with the best mortgages, pre-screened for acceptance.
The typical re-mortgage savings with Property Master is £1,800 a year over your existing mortgage outgoings and the remortgage is free from application fees for standard mortgages. These extra funds can be used to upgrade your property so that it can meet an EPC rating of E or above, in advance of the deadline.
Landlords must act now as waiting until April means it will not be possible to re-mortgage, until you have met the new EPC requirements.
Find out more about Property Master, watch our short introductory video. Please do not hesitate to contact us and see how we can save you money, helping you to tackle 2018’s new energy efficiency requirements.