What do the new rules say?
The new Minimum Energy Efficiency Regulations are due to come into force on 1 April 2018. Landlords in England and Wales won’t be able to sign new tenancy agreements on properties with an Energy Performance Certificate (EPC) rating of F or G. That includes signing new agreements with existing tenants.
More than 300,000 properties are likely to be affected by these regulations, and landlords who break the law face a £4,000 fine.
The law doesn’t apply to rented properties in Scotland or Northern Ireland. Landlords of domestic property for which an EPC is not a legal requirement are not bound by the rules.
Landlords have been required to have a certificate in order to be able to market their property since 2013.
What should I do if my property has a low rating and long term tenants?
Don’t ignore it. From 1 April 2020 all domestic private rental properties must be at a minimum of EPC band E, whether a new lease is being signed or not.
Are there any exemptions to the rules?
In special circumstances, landlords may be able to claim an exemption from the rules. This includes situations where all improvements have been made and the property still remains below an EPC rating of E.
Properties that fall within the scope of a “Listed Building” are excluded from these rules as well as properties that are hard to treat or improve for structural reasons. In addition, MEES does not apply to lettings of six months or less, or to lettings of 99 years or more.
According to the new rules, exemptions must be registered on the Private Rented Sector (PRS) Exemptions Register, details of which can be found here.
What are the benefits for landlords?
A property with a better rated EPC should be more attractive to let within a competitive rental market. It will help reduce tenants’ energy bills, which again, could improve the appeal of a property.
Government research shows that rental properties with higher levels of energy efficiency have far fewer void periods (31%) than those with sub-standard ratings.
How will the regulations be enforced and what are the penalties for failing to comply?
The regulations will be enforced by the local authorities across England and Wales. Local authority representatives may check whether a property meets the minimum level of energy efficiency and may issue a compliance notice requesting information if it appears that a property has been let in breach of the regulations.
A civil penalty of up to £4,000 can be imposed by the local authorities for non-compliance. Landlords who flout the law will not only face fines but are likely to lose revenue on empty properties which cannot be legally let until they meet the required standards.
What should landlords do?
The first step is to ensure your property has a valid and up-to-date EPC that takes account of any improvements made to the property - before deciding what other improvements need to be made.
If you do not have your certificate to hand, you can search here for a copy using the property’s postcode.
If you think you need a new certificate, you should find an accredited Domestic Energy Assessor. A link to a Government website which lists formally approved assessors can be found here.
Some energy companies offer help to landlords and you can contact them for advice and find out how to upgrade your property’s energy efficiency.
Tenants are also entitled to carry out improvement works at their own expense. As of 1 April 2016, it became unlawful for landlords to unreasonably refuse a tenant’s request to carry out such works.
What is Green Deal Finance?
The Green Deal can help landlords to make energy saving improvements to their properties without paying up front. The loans are repaid through electricity bills of the improved properties. If the tenant pays the electricity bill, landlords need their express permission before taking out a Green Deal at the property.
More information about the Green Deal Finance plans are available here.
What should landlords be doing right now?
The Government estimates that up to 10% of all domestic properties in England and Wales currently have an EPC rating of lower than band E.
In order to avoid a hefty fine, landlords should take action now to ensure their properties are compliant, or are registered as an exempt property.
Improvements might include loft and wall insulation, LED lighting, and updating old boilers and appliances.
If you haven’t yet thought about how you need to improve your property ahead of the deadline, there is no time like the present! More information on the new guidelines can be found in Private Rented Landlord Guidance.