Article Posted -
10 Oct 2017

Greenhouse

With less than six months until the Minimum Energy Efficiency Standards come into force, the Government has at long last published detailed guidance for private landlords.

Read the detailed guidance in full on the Gov.UK website here, or download it below.

Landlords of properties with an EPC rating of F or G should read the guidance and take action now before the standards come into force in April next year.

Along with the guidance, the Government has also opened the PRS Exemptions Register upon which landlords must register an exemption if their F or G rated property qualifies for one.

The Basics

The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 set out the requirement for domestic private rented properties in England and Wales to have a minimum Energy Performance Certificate (EPC) rating of E.

  • From 1st April 2018, landlords will be prohibited from granting new tenancies for properties with an EPC rating below E. This includes extensions and renewals of existing tenancies, or a tenancy becoming a statutory periodic tenancy following the end of a fixed term shorthold.
  • From 1st April 2020, this restriction on landlords letting out sub-E rated properties is extended to cover all existing tenancies for properties in scope of the regulations.

Local authorities will enforce compliance and non-compliant landlords could face a financial penalty of up to £5,000.

Is my property in scope?

Properties within scope will include any “domestic privately rented property” which: has an EPC, and is either (i) required to have an EPC; or (ii) is within a larger unit which itself is required to have an EPC, either at point of sale, or point of let. No changes are made to existing regulations regarding the provision of EPCs.

This does mean that HMOs with rooms let out on individual tenancies are in scope of the regulations if they have a valid EPC due to either being bought or rented out on a single tenancy in the last 10 years.

For the purposes of these regulations, “domestic privately rented property” covers:

  • Properties let under an assured tenancy or a shorthold.
  • A tenancy which is a regulated tenancy for the purposes of the Rent Acts.
  • Properties let:

(a) On a tenancy which is an assured agricultural occupancy

(b) On a protected tenancy under the Rent Act 1976

(c) On a statutory tenancy under that Act.

Exemptions

There are only a few exemptions to the regulations that landlords can use. Landlords seeking to make use of one of the following exemptions must ensure it is registered on the PRS Exemptions Register, operated by the Government, which opens on 1st October 2017:

  • They have undertaken all “relevant energy efficiency improvements” but the property remains below an E, or no such improvements can be made to the property. A “relevant energy efficiency improvement” is one which:
      • Is listed in the Green Deal (Qualifying Energy Improvements) Order 2012 and has been identified as a recommended improvement for that property in a green deal report, a recommendation report, or a report prepared by a surveyor, and
      • Can be wholly financed, at no cost to the landlord, by means of funding provided by central government, a local authority, or any other person.
  • The landlord requires consent from the tenant/s, and the occupying tenant/s withhold that consent.
  • The landlord has only recently become the landlord for the property
  • Third party consent is required for the requested improvements but this consent cannot be obtained (e.g. planning permission or consent from mortgage lender).
  • Measures required to improve the property are evidenced by a suitably qualified independent surveyor as expected to cause a capital devaluation of the property of more than 5%. Only those measures that are expected to cause such devaluation would be exempt from installation.
  • The landlord has obtained a written opinion, from a suitably qualified person or from the independent installer engaged to install the measure, advising that it is not an appropriate improvement due to its potential negative impact on the fabric or structure of the property (or the building of which it is part). This exemption is only in relation to wall insulation.

Each exemption, once registered on the PRS Register, is valid for 5 years except for two:

  • Where a landlord has recently become the landlord of the property that exemption is only valid for 6 months.
  • Where a tenant has withheld consent for energy efficiency improvements that exemption is only valid until that tenant’s tenancy ends (or after 5 years, whichever is sooner).

Exemptions may not pass over to a new owner or landlord of a property upon sale, or other transfer. If a let property is sold or otherwise transferred, the exemption will cease to be effective and the new owner will need to either improve the property to the minimum standard at that point, or register an exemption where one applies.

Read the detailed guidance in full on the Gov.UK website here, or download it below.

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