Martyn Reed, Managing Director of energy performance specialists Elmhurst Energy, looks at energy efficiency legislation affecting landlords:
The energy efficiency standard in private rental properties is amongst the lowest within the UK housing sector. The Government has turned its attention to this market with a stated aim to address this, not just because of carbon reduction commitments, but also due to the high levels of tenants living in fuel poverty.
Last year, two pieces of legislation relating to energy efficiency of properties, which have a real impact on landlords, came into force: the Tenant’s Energy Efficiency Improvement and Minimum Energy Efficiency Standards, both of which are part of the Private Rental Sector Energy Efficiency Regulations 2015.
Martyn Reed, Managing Director of energy performance specialists Elmhurst Energy
This new energy efficiency legislation gives more rights to tenants and sets a minimum standard of energy efficiency. Since 1st April 2016, all domestic tenants have had the right to request consent for energy efficiency improvements. This applies to all privately rented domestic properties let under an assured tenancy and a regulated tenancy. This will be widened to cover an assured agricultural occupancy, protected tenancy and statutory tenancy. There are some exceptions. If the building is exempt from having an Energy Performance Certificate (EPC), then a landlord is not required to provide consent. The tenant must also show that the measures could be installed with no upfront cost to the landlord. However, residential private landlords cannot unreasonably refuse consent to a tenant’s request for energy efficiency improvements if the various criteria are met. It’s imperative therefore that landlords are aware of their obligations and do not get caught out by these changes.
Coupled with this legislation, from 1st April 2018, the minimum EPC rating for private rental properties will be set at a band E. The regulations will initially only apply upon the granting of a new tenancy to a new tenant and a new tenancy to an existing tenant. However, from 1st April 2020, the regulations will apply to all privately rented property within scope, which are those that have an EPC or are required to have an EPC as per existing EPC legislation. While some exemptions apply (including where improvement measures would devalue the property by more than 5%, or where properties are unsuitable for wall insulation) there are penalties if regulations are not met, with fines up to a maximum of £5,000.
So, now is the time for landlords to begin planning and implementing the energy efficiency improvements to their property portfolios.
Hints and tips
Complying with energy efficiency legislation
- Assess your property’s energy efficiency rating using an Elmhurst accredited energy assessor to produce a Energy Performance Certificate (EPC). It is recommended that you only rely on a recent EPC as changes in the building, in technology and fuel prices can all impact the EPC recommendations. You can find an energy assessor in your area via a search facility here: elmhurstenergy.co.uk
- Don’t get caught out by the Deregulation Act, as EPCs are central to this legislation too. As a landlord entering a short-term tenancy, you risk losing your right to issue an eviction notice under Section 21 if you have not complied with all your legal obligations, including the provision of an EPC.
- If your property does not reach energy efficiency rating band E, plan for energy saving measures such as cavity wall, loft insulation, hot water, cylinder insulation or double-glazing. Your EPC will indicate options including estimates of cost, payback and the predicted improvement in your rating.
- Landlords with multiple properties may consider using energy efficiency software such as Elmhurst’s Streamline EPC, which can help you to calculate the effect of improvements over your portfolio of properties.
Don’t see the energy efficiency measures as punitive. Remember, energy efficiency measures do require some initial outlay, but will save your tenants money, make their home more comfortable and add to the value of your property run. Think of them as an investment in your business.
For more details on Elmhurst Energy, please visit: www.elmhurstenergy.co.uk