As landlords and letting agents are aware, from the 1 April 2018 in order to let a property on a new assured shorthold tenancy, renew an existing shorthold tenancy or where the existing shorthold tenancy becomes a statutory periodic tenancy, it has been be unlawful for a landlord to let the property if its minimum energy performance rating falls below E.
This provision follows the coming into force of the Energy Efficiency (Private Rented Property) (England and Wale) Regulations 2015. A civil penalty of up to £4,000 will be imposed for breaches of these Regulations.
Ultimately the Regulations will apply to all tenancies whether new or not from 1 April 2020 so this article should act as notice to get your properties in order now.
The Regulations specify that where a property is required to have an Energy Performance Certificate (EPC) and the EPC is still current (i.e. is still within its 10 year lifespan) then the minimum E rating will apply to all new tenancies granted or renewed after 1 April 2018. This means if it falls below the E rating, before the landlord can re-let the property, certain works will be required to bring it up to the minimum E standard.
If a property was required to have an EPC but it has since expired there is no need for the landlord to comply with the Regulations immediately BUT if the landlord is intending to let their property again, then they will be required to have a new EPC and it will have to show that the property has a minimum rating of E. If it doesn’t then works will be required to ensure it reaches the required E rating.
By 1 April 2020 the Regulations will apply to all tenancies whether new or not where there is a legal requirement for the landlord to have an EPC. For landlords this means they should be assessing their EPCs and seeing if they will still be valid in 2020 and if the rating falls below E, steps should be taken to bring the property up to the correct rating. A new EPC should be obtained to show that the property falls within the right rating.
What types of tenancy does this apply to?
Assured tenancies whether shorthold or not, statutory periodic tenancies coming into force after a fixed term tenancy expires, a new assured tenancy acquired by succession, a new tenancy granted to a Rent Act tenant of the same or a new property owned by the landlord, an agricultural or similar tenancy whether granted, renewed or extended.
What about listed buildings?
For some time this has been a grey area in terms of EPCs and to some extent it still is. Many landlords believe their properties will be excluded from having an EPC if they are listed or in a conservation area. However the law on this is not clear. If the property is not being let then an EPC is not required. However when it comes to it being let or sold it appears that the new law may apply and certain works may be required to be carried out although not if it resulted in an unacceptable alteration to the building. So should a landlord with a listed or conservation area property get an EPC? The guidance from the DCLG suggests that perhaps a landlord should obtain an EPC as a landlord will only know if their property falls below the rating once the EPC is obtained. Advice can then be sought from their local listed building/conservation department at the local authority as to what works might be acceptable and unacceptable. Each property is judged on its own characteristics and as there are no real guidelines it is recommended that legal and professional advice is sought.
What works are required to be carried out?
So long as the property ends up being left with a rating of E or above then the landlord may choose the works that should be carried out. Such works could include: providing thermostat boilers, cavity wall insulation, draught proofing, more efficient hot water systems such as showers and taps, better heating ventilation and air conditioning controls, loft insulation, pipework insulation, ceiling improvements, secondary glazing and the list can go on!
Once a landlord knows that works are going to be required to the property, advice should be sought from contractors and other experts as to the types of work that could be carried out and what these would cost the landlord. Particularly if the property is a listed building, it may be the case that some improvement works could be carried out without unacceptably altering the property.
What about exemptions?
A landlord can apply for an exemption in certain circumstances as only appropriate and permissible cost effective improvements are required to be carried out.
Some of the exemptions are as follows:
- Works have been carried out and it is still under an E rating but the works carried out were cost effective. The landlord must have evidence of what has been done.
- Where the landlord requires consent to do the works and the tenant will not give this, although the tenancy agreement should be reviewed as consent is not always needed. It should be checked to see whether improvement works can be carried out without consent or whether it is just repairs.
- The works that are required to be carried out would mean the property was devalued by more than 5%. This would need to be qualified by a suitable independent surveyor.
Landlords should be reviewing their EPCs to consider what works, if any, are required to their property to ensure they can continue to let them.
For further information contact Sarah Woolnough on 01227 763939.
Whilst every care has been taken to ensure the accuracy of this blog at the time of preparation, it is not intended to be a substitute for legal advice. Specialist legal advice should always be sought before taking, or refraining from taking, any action.