Since 1 April 2018 it is an offence to rent out a property on a new tenancy, both residential and commercial properties, which includes a renewal tenancy, without a valid Energy Performance Certificate (EPC), which normally means having a minimum energy performance rating of E.
So far existing tenancies are exempt, but landlords with existing tenancies on properties currently rented out in the private rented sector are being advised to take note of the next deadline that relates to the energy performance of the building.
The next deadline comes on 1 April 2020, which means that then it will be unlawful to be renting any property with an existing tenant unless it has a minimum energy performance rating of E.
This reminder by Clare Gregory from Clarke Willmott LLP in Cardiff, published by businessleader.co.uk, is advising that landlords to start making plans now so that any properties in their portfolios are up to standard by the 2020 deadline. If landlords fail to do so they will be subject to a fine of £4,000, and also they could hit mortgage and re-mortgage problems, even if just one property in their portfolio is below standard.
Clare Gregory has said:
“From a tenant’s perspective, the forthcoming changes mean that they may find that they can potentially drive down their rent or threaten to move on if the required improvements aren’t made.
“The landlord will then be unable to re-let or sell the property without carrying out potentially costly works to improve its energy efficiency rating. If this scenario is repeated across a portfolio of investments, then the risks are easy to see.
“A landlord may find themselves with a portfolio of properties which can’t be let without expensive improvements being carried out, and not even able to cut their losses and sell poorly performing assets which fail the EPC test.
“When looking at their list of legal obligations, landlords might see the introduction of this legislation as another hoop to jump through. However, they have been brought in as a way to improve energy efficiency of homes.
“Thinking they can do little or nothing is therefore not really an option unless owners are happy to risk ending up with a portfolio of void properties on their hands, whereas undertaking a programme of improvements over the next couple of years could help to spread the cost and minimise future risks.
“There is still plenty of time to make sure any properties are up to scratch in terms of energy performance. Conversely, savvy landlords who are already ahead of the game and have better rated properties will be able to attract those wavering about whether to stay put or move on.”
“The obvious thing to do is to undertake any energy efficiency improvements during current void periods or lease breaks. They will more than likely be simple, low-cost measures which can be implemented and will have a significant impact on the energy rating of a building.
“We will be encouraging residential property owners to prepare a programme of capital improvements so that the necessary spend can be spread over the next couple of years rather than left to the last minute.
“By undertaking works and improving the energy rating there is the additional benefits of reduced energy use and operating costs, which may be attractive to potential tenants. Better still, it could also avoid a potential fine that could run into thousands of pounds!”
Changes you can make
These are some priority changes that landlords should consider, quick hits to bring the average rental home up to standard, and in some cases help with funding will be available:
- Put in double glazing – estimated cost: £2-3,000
- Replace an inefficient boiler – estimated cost: £2,000
- Loft and wall insulation – estimated cost: loft £500 and wall £400
- Install new radiator valves – estimated cost: £4-500
- Switch all your light bulbs to LED – estimated cost: £80-100