Landlords could be liable for massive fines, without realising they are doing anything wrong.
It’s not exactly been a great couple of years for the nation’s landlords.
It seems like every couple of months there are new rules for them to get to up to speed with, from higher Stamp Duty when purchasing additional properties to the stripping back of tax reliefs.
One change implemented a year ago covered energy performance certificates (EPC), and how efficient a property needs to be in order for landlords to be allowed to let it out.
However, even if landlords have acted on the advice in their EPCs and improved the efficiency of their properties, it turns out that they may still be breaking the rules.
Let’s talk about EPC
If you want to rent out a property, then you need to have an EPC for it, which breaks down just how energy efficient it is.
When a home’s efficiency is tested by an assessor, it is given a rating from A to G. The most efficient get an A, while those homes given a G are pretty dreadful when it comes to efficiency.
Landlords must ensure that their rental properties garner at least an E rating. This was increased last April – before that you could let out a property with an F rating.
If a landlord lets out a property with a worse rating, then they may be subject to significant fines.
The local authority can determine how much, up to fine caps of up to £2,000 if the property has been let for less than three months, doubling to £4,000 for longer substandard tenancies.
Not exactly small change.
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Can you trust an EPC?
An investigation by property tech firm Spec looked into the techniques employed by assessors to measure properties, a crucial element of establishing how efficient the property is.
And it found that average discrepancies of more than 8.6% between the actual size of the property and the size reported in the EPC.
What’s more, around a quarter of homes were mis-measured by more than 10%.
This may not seem like a big deal, but the firm argues that a 3% change in area is enough to alter the efficiency scores of around two-thirds of the EPCs it has looked at.
Around half of EPCs were found to be so inaccurate that they needed to be regraded.
Anthony Browne, a senior adviser to the firm, said the research suggested that it wasn’t a case of if your EPC is measured inaccurately, but a question of just how large that inaccuracy really is.
Does this really matter?
The report argues that 10s of thousands of landlords are unwittingly renting out their properties, which may not be anywhere near as efficient as they believe.
Just from a financial perspective, this is potentially a big problem. These landlords could be liable for massive fines, without realising they are doing anything wrong.
But it also has a knock-on effect on tenants and their energy bills. If you think a home will be a certain efficiency, and it is actually a fair bit worse, then you’re going to see more significant energy bills than expected.
Equally, if we are serious about actually helping the environment, then making our homes as energy efficient as possible will play a big role. But we need to actually be able to trust the way that we test the efficiency of a property.
Realistically, nothing will happen unless the authorities agree with Spec’s report and decide to introduce new, (hopefully more) accurate ways of measuring space within properties.
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Improving the standards of rental properties
Last year’s EPC changes were an important step towards improving the quality of the homes available to tenants.
One of the Government’s aims with its many changes to the buy-to-let sector has been to professionalise it, so that there are fewer chancers looking to make a few quid and more landlords for whom property is the day job.
The idea is that if we have more professional landlords, the homes on offer will be of a better standard.
Another change made last year aimed at improving the lot of tenants covers Houses in Multiple Occupancy (HMOs). Previously, you only had to get a licence in order to let out an HMO if it had five or more occupants and was over three storeys.
That height requirement has been removed though, alongside the introduction of minimum sizes for any rooms deemed bedrooms.
This is important, as not only does it mean people aren’t being left to live in tiny cramped rooms, but there is now far more oversight of HMOs to ensure that landlords are meeting their obligations.
Clearly, though there is a lot of work still to do in improving the quality of the homes tenants live in.
With home ownership out of the hands of so many – the average age of a first-time buyer has increased over the last 20 years from 26 to 34 according to Aviva – the least we can do is ensure that rental homes are up to scratch.