Posted in Industry News
Do you own an older style property that you let out? Are you ready for the upcoming change in legislation on Energy Performance Ratings?! If not it could prove extremely expensive for you, as you may not be allowed to let it after April 2018.
Did you know that there are currently over 50 acts of parliament and over 70 further regulations, making property letting one of the most regulated sectors after finance in the UK today? This fact makes it incredibly difficult to stay current and keep up with the changes. Sadly most of the recent legislation includes draconian fines (often running into thousands of pounds) so it is really worthwhile dealing with those who know and understand UK property law.
The change of law I am referring to in this blog is part of the Green Deal initiative. Initially conceived in 2010 and enacted into law in 2012 this legislation was driven by the Climate Act 2008 which legislated for a reduction in the UK carbon emissions of 34% by 2020 and 80% by 2050. It set legally binding carbon budgets for the next 12 years (up till 2020), across all sectors of the UK economy including our homes, rental properties, communities and places of work.
In 2016 new rights were introduced which allowed tenants to request additions to their rented properties to reduce the costs of heating (additional insulation, new energy efficient boilers etc.) However, the really big part of this act of parliament will come into force in just over one year and this is what we really want to draw your attention to today.
As from the 1st April 2018, there will be a requirement for any properties rented out within the private rented sector to have a minimum energy performance rating of E on an EPC. These regulations will come into force for new lets and renewal of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. Therefore, it will be unlawful to either market or rent a property which breaches the requirement for a minimum E rating (unless there is an applicable exemption and I am informed there are only three, which have to meet very exacting and specific criteria). A civil penalty of up to £4,000 will be imposed for any breaches successfully prosecuted. For ease, I have included a link which summarises the regulations for you.
There are rate regulations effective from 1st April 2016 under which a tenant can apply for consent to carry out energy efficiency improvements in private rented properties. Information can be found here.
Firstly, I would advise you to check that you have a current Energy Performance Certificate. EPCs became law in 2007 and are valid for ten years so you may well be ready to renew this year. Remember it is illegal to market any property (unless there are legal exemptions), for either sale or rental, without a current EPC. There is a publically accessible register for all EPC’s if you’re unsure then you can visit www.epcregister.com
Next, I would suggest that you check the information held on your current EPC to make sure that the grade is either E or above. As mentioned above, from April 2018 if your property comes up for rent and your EPC is graded as F or a G, basically you can’t rent it out.
If you have tenants currently within tenancy either in fixed term or periodic, then you do have a further two years to make the necessary changes (as long as they do not leave and you cannot renew either during this period). However, if your tenants are still there in April 2020 and you haven’t done the improvements then your tenancy ceases to be legal and you could be fined up to £4000 plus any civil actions for compensations from other interested parties (this could be tenants, guarantors, relevant persons etc.)
It is worth noting that although the energy grants are not what they used to be, there is still money available and we are currently working with our suppliers and providers to try and get our clients savings on any essential works required. Funding is currently based on carbon footprints and the way the government determines grants will be changing once more in April 2017, so again we would advise that you to act swiftly if you are to achieve any potential savings on what could well be essential work to allow you to continue letting your property.
If you have any questions about this blog post or any other letting or management issues you would like to discuss, then you are welcome to call me at our Durham office 0191 212 6970.
– John Henderson, F.INST.S.M.MBack to News