Posts with tag: EPC

Councils called on to take action against rented homes that fail MEES

Published On: May 4, 2022 at 8:46 am

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Ahead of Thursday’s elections, Generation Rent is calling on councils to identify local private rented homes that fail Minimum Energy Efficiency Standards (MEES).

It says councils should take action to bring properties up to standard, while giving tenants protection from eviction and a chance to claim back rent.

Generation Rent analysed EPC data to assess the scale of the problem in each region in England. A total of 201,000 homes recorded as private rented are classed as F on their EPCs and 62,000 are classed as G, out of a total of 4,265,000 with an EPC.

Recent research by JLL found that, following the increase in the energy price cap, the average energy bill for a Band G property is now £4,950 per year and £3,587 for a Band F home. For a home at the legal minimum of Band E, the average bill is £2,687. Upgrading a Band F home to the legal minimum would therefore save the average tenant £900 per year and upgrading a Band G home is worth £2,263. Across all households affected, landlords’ failure to comply with the law is worth £321m per year.

Since April 2020, under MEES, landlords are no longer allowed to let out a home with an EPC band of less than E, unless it has an exemption. As of 1st July 2020, just 9,269 private rented properties had an exemption from MEES.

Local authorities are responsible for enforcing MEES. Generation Rent made Freedom of Information requests to councils accounting for two thirds of England’s private renter population. Of the 101 councils that provided information about their MEES enforcement work in 2020-21, just 13 issued enforcement notices, a total of 359.

Barnsley Council issued the most notices (181), followed by Bristol (35) and Thanet (30).

Landlords failing MEES are only liable for a maximum fine of £5,000, and their tenants are not protected from eviction if they complain or eligible to claim money back to compensate for higher bills.

However, Generation Rent points out that councils enforcing MEES can usually serve non-compliant landlords with improvement notices on the basis that the home is too cold to be considered safe. This protects tenants from a retaliatory eviction for six months and gives them the basis to claim back rent through a Rent Repayment Order if the landlord fails to make the necessary improvements.

As voters elect councillors on 5th May, Generation Rent is calling on councils to commit to using publicly accessible data on EPCs to identify tenants in cold homes and all their enforcement powers, including improvement notices, to protect them.

Alicia Kennedy, Director of Generation Rent, comments: “A quarter of a million households are in homes too cold to be legal and with energy bills through the roof, they are paying hundreds, if not thousands, of pounds more than they should as a result. People will miss meals, get ill, and fall into arrears as a result of their landlord’s negligence. “Councils have the data and the powers they need to protect the most vulnerable tenants – but at the moment most are not using them. The government needs to act much faster to ensure that private landlords insulate their properties, including by reforming tenancies to give tenants more confidence to exercise their rights.”

Government EPC rating plans causing confusion, Leeds estate agent finds

Published On: April 11, 2022 at 8:46 am

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Widespread confusion has been caused by Government plans to enforce a minimum energy performance certificate (EPC) rating requirement of C, says Leeds estate agent HOP.

The Government is considering making a C rating the minimum requirement for all new tenancies by 2025 in England and Wales. This will also apply to all existing tenancies by 2028.

The changes are now part of the Minimum Energy Performance of Buildings Bill, which is currently going through parliament.

HOP is advising both new and existing landlords to seek expert advice and carefully consider a property’s EPC when it comes to new investments.

Luke Gidney, Managing Director at HOP, comments: “The EPC rating scheme has seven different bands, with G being the least energy efficient and A the most efficient. Currently, rental properties in England and Wales need to have an EPC of at least E to be let, unless they are exempt, but the Government is considering increasing this to C, as part of its ambition to hit net zero carbon emissions.

“However, a surprising number of new and existing landlords are unaware that these changes are on the horizon. Some estate agents avoid mentioning it in order to secure a sale, but we work hard to make sure that investors fully understand what they’re buying.

“We’re already advising a number of landlords on steps to improve their ratings and have decided to launch a comprehensive EPC Consultation Service to help navigate the proposed changes. Several members of our team are training to be official EPC assessors, so we can provide tailored and strategic advice on the best ways to improve a property’s energy performance.

“It’s also important to remember that the Minimum Energy Performance of Buildings Bill still has a long way to go before it becomes law, and it could still be thrown out, and this is part of the reason why there’s so much uncertainty and confusion around it.

“In many cases, turning a property into a C rated home could be as simple as improving the insulation or installing a more efficient boiler, but in some older properties it could require significant investment and work. It’s therefore important that anyone investing in property now, as well as existing landlords, fully understand the EPC rating that’s put in front of them and seek professional advice.

“Despite the possibility of the new legislation and the impact it may have on some properties, Leeds remains a very attractive location for investors. The city naturally offers better value for money than many other parts of the UK with attractive yields, against the backdrop of a strong local economy and high demand for quality rental property from both professionals and students.

“There’s also a good range of housing stock, with modern apartments and new builds always proving popular for investors and these are often built with a B or C rating. However, often it’s the older houses and traditional Leeds terraces in the sought-after suburbs surrounding the city centre, that offer the best yields, but these are generally less energy efficient than new stock.

“Investors buying these types of properties definitely need to consider how much it could cost if the property had to achieve a C rating and plan ahead for the possibility.”

Energy efficiency support failing to help tenants most in need

Published On: July 26, 2021 at 8:15 am

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Only 5% of private rental households in England have received government help with funding energy efficiency measures. The National Residential Landlords Association (NRLA) highlights that this is despite them having the greatest need.

Although more of those classed as fuel poor live in the sector, private rental households received only half of the help given to those in the social sector.

According to the English Housing Survey, a third of private rental sector housing was built before 1919. The NRLA says this is the hardest to treat and accounts for a larger proportion of the sector than for any other housing tenure. Across England’s entire housing stock, 84% of properties built before 1919 had an energy rating or D or worse.

With 62% of private rental homes having an energy rating of D or below, the NRLA says this will largely account for why the 37.6% of all households classed as fuel poor are in the private rental sector, compared to 23.2% in the social sector, according to the Department for Business, Energy & Industrial Strategy.

Data also shows that 97% of private rental properties with an energy rating of D or lower could reach C or better. Despite this, just 5% of private rental households across England have received any financial support under government schemes to improve the energy efficiency of housing. This compares to 21% of owner-occupiers, 12% of council households and 11% of those in housing association properties.

Ministers want all new private rental tenancies agreed from 1st April 2025 to be in properties with an energy performance rating of C or better. According to government figures, it would cost an average of over £7,500 to bring rental properties needing it to an energy rating of at least C.  

The NRLA is warning that this makes the Government’s ambitions to improve the energy efficiency of the rental housing stock a pipe dream when the average net annual rental income for a private landlord is less than £4,500. As such, they are calling for a bespoke financial package to support the improvements that are needed.

Among the NRLA’s proposals is the development of a scrappage scheme to upgrade windows in private rental homes. A higher proportion of properties in the sector have no double glazing than any other tenure.

It is calling also for energy efficiency measures carried out by a landlord to be offset against tax as repair and maintenance, rather than as an improvement at sale against Capital Gains Tax. This would address anomalies including that whilst replacing a broken boiler is tax deductible, replacing one for a more energy efficient system is not.

Ben Beadle, Chief Executive of the NRLA, comments: “We all want to see energy efficient rental homes. They cut bills for tenants, make homes more attractive to potential renters and help the country to achieve its net zero commitment.

“The Chancellor needs to develop a financial support package that works for landlords and tenants. This should especially be targeted at the hardest to treat properties where the cost of work will be prohibitive for landlords. In this way, he will also be doing the most to help the fuel poor.”

More support needed for landlords to boost energy efficiency

Published On: February 25, 2021 at 9:14 am

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Ahead of the Budget on 3rd March, the National Residential Landlords Association (NRLA) is calling for tax reform to support energy improvements for rented homes.

This comes as MPs on the Environmental Audit Committee concluded last week that the delivery of the Government’s flagship Green Homes Grant scheme has been “poor”. It noted that the eligibility criteria for the scheme: “prevented many from being able to access vouchers for the measures they required.”

The NRLA highlights that 32% of properties in the private rental sector (PRS) were built before 1919, making it a huge challenge to improve energy efficiency compared with any other housing sector.

The Government has committed to upgrade as many PRS homes as possible to Energy Performance Certificate (EPC) Band C or better by 2030. Currently, 62% have an EPC rating of D or lower.

The NRLA is calling on the Chancellor to help achieve this by ensuring that the tax system actively supports landlords who want to make energy improvements. Ministers have proposed to increase the amount up to which landlords have to pay to make a property more energy efficient from £3,500 to £10,000.

According to Government data, the average gross rental income for landlords is £15,000 per year (before tax and other deductions). The NRLA is concerned that the impact of this change is likely to decimate the income of some landlords. It proposes that energy efficiency measures carried out by a landlord should be offset against tax at purchase, as repair and maintenance, rather than as an improvement at sale against Capital Gains Tax. This would address anomalies – for example, whilst replacing a broken boiler is tax-deductible, replacing an energy-inefficient model for a more efficient boiler or heating system is not.

Ben Beadle, Chief Executive of the NRLA, comments: “The rental market stands ready to play its part in securing a green recovery. However, to achieve this we need a tax system that properly supports and encourages the work needed to ensure rented homes as are energy efficient as possible on a long-term basis. The Green Homes Grant scheme proves that short term measures do not work.  

“The Chancellor needs to use tax more positively to encourage investment in energy improvements. This would play a crucial role in cutting bills for renters, reducing carbon emissions, and improving the nation’s housing stock.”

Landlords need to prepare for new MEES regulations in April

Published On: January 6, 2020 at 9:44 am

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As of 1st April 2020, the Minimum Energy Efficiency Standards (MEES) regulations for new and existing tenancies in the private rental sector will change.

Going forward, they will be required to have a minimum energy performance rating of ‘E’ on the property’s Energy Performance Certificate (EPC).

This change has been on the way since 1st April 2018, when it became unlawful for a landlord to let a “non-compliant” or “sub-standard” building that has an EPC rating of F or G. The best possible rating is A.

As such, law firm Fladgate LLP has looked into what this will mean for landlords.

Exemptions to new EPC rules

There are a few ways in which a landlord may be exempt from this change in MEES regulations. Fladgate points out the following situations:

1. Exemption due to devaluation – a temporary exemption of 5 years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of the property by more than 5%;

2. Exemption for new landlords – if a person becomes a landlord recently or suddenly in specified circumstances under the MEES Regulations, a temporary exemption of six months will apply; and/or

3. Third-party consent – if a landlord cannot obtain necessary third-party consents to improve the EPC rating of the property (including but not limited to lender consent, superior landlord consent and/or tenant consent), then a landlord may let a “sub-standard” property. 

If you are a landlord looking to rely on an exemption then you must register on the online PRS Exemptions Register, says Fladgate.

What if I don’t comply with the MEES Regulations?

If a landlord fails to comply with the new MEES regulations, they risk a financial penalty. This can vary depending upon the length of the breach.

Fladgate summarises:

  • A landlord renting out a “non-compliant” property (less than three months in breach) may be fined up to either £5,000 or 10% of a rateable value up to a maximum of £50,000, whichever is greater. 
  • A landlord renting out a “non-compliant” property (three months or more in breach) may be fined up to either £10,000 or 20% of the rateable value up to a maximum of £150,000, whichever is greater.
  • There is also a fine of up to £5,000 for providing false or misleading information or failing to comply with a compliance notice. 

What should I do to prepare for the new MEES regulations?

If you have a let property with an EPC rating of F or G then you should prepare now for the extension of the regulations to existing tenancies, says Fladgate.

As the deadline fast approaches, the law firm advises landlords to consider the following, in order to protect their assets:

1. Review your property or property portfolios to identify whether or not properties are compliant;

2. Consider the cost and extent of any works required;

3. Consider access to the properties (lease terms permitting) to carry out works required to bring the properties up to the minimum ‘E’ rating; and

4. Consider whether any exemptions may be relied upon. 

There is speculation that MEES will rise again in 2022, making ‘C’ or ‘D’ the new minimum requirement. When considering any works to upgrade a property to comply with the MEES Regulations for April 2020, landlords should also bear in mind the potential future impact of the regulations. 

Expectations for changes to the private rental sector in 2020

As we enter a new year (and a new decade!), specialist landlord insurance provider Just Landlords has collated a list of the biggest changes it expects to see for the private rental sector (PRS).

Here’s a summary of what is likely to be just around the corner for landlords, letting agents and tenants:

  1. Section 21 – Abolishing this as an option for landlords looking to evict their tenants will mean big reforms to the Housing Act.
  2. EPC law – As of 1st April, landlords will need to ensure the properties of all private tenancy lets have an Energy Performance Certificate rating of E or higher.
  3. Grenfell Tower – All building types are under scrutiny, including those in the PRS, to make sure we’re doing all we can to avoid such a devastating event happening again.
  4. Rent controls – There has been a mixed reaction to this suggestion, so we’ll see if it comes up again in 2020.
  5. Mandatory three-year tenancies – The initial proposal was not well-received, but will we hear more on the matter? It has to be said that some would benefit from the option of a three-year contract.
  6. Rogue landlord database – Will tenants and prospective tenants finally be able to access this database to help avoid falling victim to rogue landlords?
  7. Landlord taxes – Already an issue driving many from the market, will our current Conservative government lessen the burden or increase it?
  8. Brexit – Are you as fed up with this portmanteau as we are? We’re Brired of Brearing about it… The official deadline is 31st January, so 2020 will be the first year we feel the effects of whatever decision is made.
  9.  Lifetime Rental Deposits – This one could really make a difference to the ease of renting for all involved. We hope the Government turns its attention to this sooner rather than later!

Em Morley, spokesperson for Just Landlords, comments: “We say these are our expectations, rather than predictions, as this is the least we’re expecting from the Government and local authorities.

“Progress is vital for the sector, as it’s about more than the businesses of landlords and letting agents. It’s also about the supply of safe, comfortable and affordable housing needed in the UK.”

Read Just Landlords’ full article on their blog.