From 1st April 2018, it will become unlawful to let a property in the private rented sector if it has an energy performance rating below an E on the Energy Performance Certificate (EPC).
Does this effect me?
If you let a residential property in England or Wales, then most probably, yes!
The Regulations will apply to domestic properties that are let under an assured tenancy (such as an assured shorthold tenancy), as defined in the Housing Act 1998, or a regulated tenancy, as defined in the Rent Act 1977.
The Regulations will also apply to some non-domestic property (a property which is let on a tenancy but is not a dwelling).
When will this come in to force?
After 1 April 2018, the Regulations will apply when you:
- Grant a new tenancy to a new tenant; or
- Grant a new tenancy to an existing tenant (note, the tenancy moving from a fixed term to a periodic tenancy from 1st April 2018 is considered, in this case, to be granting a new tenancy)
After 1 April 2020, the Regulations will apply to all privately rented properties within the scope of the Regulations and so it will also affect your existing tenancies.
What should I do now?
First check your EPC to see what rating your property is. You can check the EPC register here.
Thanks to some changes that have been made to the bandings over time, in some cases a new EPC being completed can improve the rating from an F to an E, though this can not be guaranteed. Should you wish to have a new EPC to be completed, we can arrange this for you.
If your property is below an E rating, it may be the case that you are able to register your property as exempt from the Regulations (see below list of exemptions).
There are certain exemptions to the Regulations:
- Where all the “relevant energy efficiency improvements” for the property have been made (or there are none that can be made) and the property remains sub-standard;
- Where a recommended measure is not a “relevant energy efficiency improvement” because the cost of purchasing and installing it cannot be wholly financed at no cost to the landlord;
- Wall insulation exemption: where a particular type of insulation may have a potentially negative impact on the fabric or structure of the property;
- Property devaluation exemption: where carrying out energy efficiency improvements will negatively affect the value of the property;
- Third party consent exemption: if you are unable to carry out improvement works because you have been unable to obtain third party consent from a tenant, planning authority, superior landlord or freeholder;
- Temporary exemption due to recently becoming a landlord (note, there are specific and limited circumstances when this exemption is applicable)
If you believe that a property you rent qualifies for an exemption from the minimum energy efficiency standard, an exemption must be registered on the National PRS Exemptions Register.
Exemptions will be made on a self-certification basis, with enforcement authorities monitoring and auditing applications to ensure that exemptions are registered in compliance with the Regulations. There is no charge to apply for an exemption. No certificate or similar is issued, but the exemption will be logged on the register. False applications can result in a civil penalty.
Consequences of breach
It will be unlawful for a landlord to let a property which is in breach of the minimum energy efficiency standards. Local Authorities will enforce compliance with the Regulations and will have powers to impose civil penalties.
- Providing false or misleading information to the PRS Exemptions Register – £1,000;
- Failure to comply with a compliance notice from a Local Authority – £2,000;
- Renting out a non-compliant property – < 3 months will incur a £2,000 fixed penalty and > 3 months will incur a fixed penalty of £4,000.
Note, where a property is let in breach of these regulations, the lease remains valid and rent is still payable.
You can read more on the Government’s website, or register your property for an exemption by clicking here.
Other things to know about EPC’s
An EPC is valid for 10 years. They became a legal requirement for some properties on 1st August 2007, and for all rental properties from 1st October 2008, meaning that some are now coming up for renewal.
If your EPC expires, you must have a new EPC certificate completed if you grant a new tenancy (note, the tenancy moving from a fixed term to a periodic tenancy is considered, in this case, to be granting a new tenancy), or wish to serve a section 21 notice.
Should you require a new EPC to be completed, we can arrange this for you (click here).