New proposals for updating of EPCs?
You may not be aware but since the 1st April 2020 Landlords can no longer let or continue to let properties that are covered by an Energy Performance Certificate that has a rating below E. The only way to do this is to have a valid exemption certificate in place.
If you are currently planning to let a property with an EPC rating of F or G. You will need to improve the rating to an E or register for an exemption.
There have been moves by the Government to change this again. They have recently brought out a new scheme, but it only lasts from March 2021 and you can read all about that here.
If you have a property that is F or G the regulations have been amended twice. The last amendments made on the 15th March 2019. This means that landlords must self-fund an element of the EPC but are capped now at £3,500.00 including VAT per property.
What is the idea of improving an EPC?
Properties that are rated with F and G are the least efficient in housing. They impose unnecessary energy costs on the tenants and the wider economy. This can lead to poor health outcomes. Resulting in the resource of pressure on the health services, so the Government believes. These properties also contribute towards avoidable greenhouse emissions.
To increase the efficiency of these, the Government has deemed that landlords are responsible to improve them.
Why is it the landlord’s responsibility?
While tenant’s benefit in the terms of energy reduced bills. The landlord so far as the Government are concerned also benefit. They believe that landlords can increase tenant’s satisfaction and reduce void periods. We don’t necessarily agree or believe that this is the case but that is only our opinion.
In 2016, a report by the State of Home on Social Housing, demonstrated that improving the efficiency of rental housing reduced both rent arrears and voids. The research showed that homes become more efficient and they are void for a shorter period. Cold homes have an average of two more weeks rent arrears per year higher than efficiency homes. This is all well and good when it comes to social housing but not if you are a private landlord.
What are the lowest levels of energy efficiency?
The regulations set out the minimal level of energy efficiency of a private rented property in England and Wales. The lowest levels are now an EPC rating of E. Landlords who are installing relevant efficiency improvements may, of course, aim above and beyond this current rule.
If the minimum standard level is not obtained in the private rental sector, then you cannot rent your property out. You will have to show that you have tried your best to carry out the minimum requirements. Your letting agent would not be able to grant a tenancy to a new or existing tenant if it has a rating of F or G.
From the 1st April 2020 landlords must not continue letting a relevant domestic property which was already let and had an EPC rating of F or G.
Landlords are encouraged to act as soon as possible to ensure that their property has reached an EPC of E by the deadline of the 1st April 2020. If you have not done so you will need to consider it.
What is the enforcement of a minimum level of the energy efficiency?
The local authorities are responsible for enforcing compliance with the domestic level of energy efficiency.
They may check whether a property meets the minimum level of efficiency. They may issue a compliance notice requesting information where it appears to them that the properties let in breach of the regulations. Where a local authority satisfied that the properties let in breach of regulations, they may serve a notice on the landlord imposing financial penalties.
You may also find that if, for instance, you went to court to ask for a tenant to be removed from the property as they had not paid their rent and you had an EPC of F or G the Court has a discretion not to give an order for possession.
What the Government now proposes?
The Government has decided as part of their efforts to reduce carbon emission, to increase the current proposals for new long-term improvements of the energy efficiency across the private rental sector. The Government has been warned by various associations such as the Association of residential letting agencies that the policies are not sustainable.
They are proposing a new target to lift the minimum EPC for all rental homes to a band C.
This would apply for new tenancies from 2025 and all tenancies from 2028. The Government has now outlined new proposals to include penalties of up to £30,000.00 for landlords who do not comply and are considering banning agents and portals from listing properties that do not meet the standard.
Even ARLA have stated that landlords or letting agents are already taking the brunt of tax changes and many have provided support to tenants with COVID related arrears.
A simplified exemptions regime and more financial support must be made available. Otherwise the measures in their current form, will not be achievable. That will mean further reductions in the supply of rented accommodation available.
The Government consultation runs to more than 48 pages. It includes options and detailed requirements about energy improvements that it expects from the sector. The document can be seen here.
Landlords now have until the 30th December at 11.45pm to make any representations.
How will all the above affect my insurance?
It is unlikely that anything that you do in relation to energy performance will affect your insurance at all. It is for the Government in real terms to improve the housing stock within the United Kingdom for them to reach their target for carbon emissions.
They have even now within the recommendation suggested a maximum investment to an average of £4,700.00 but up to a £10,000.00 cap.
One of the proposals that is of concern to a lot of landlords is that letting agents will be banned from advertising properties. This being if they do not have compliance EPCs. This could therefore affect your income on the property.
We have stated above that there is no effect when it comes to your insurance but don’t hesitate to contact us for a quote if you need one here.
Where does this idea of improving the Energy Performance come from?
It comes from the Department of Business Energy and Industrial Strategy in a consultation document. Which was released as part of the Government guidelines to de-carbonize buildings to mitigate the effects of climate change.
BEIS as it is commonly known stated within the documentation the following “around 43% of landlord’s use a letting agent to either let or let and manage the property for them. In addition, online property platforms (which are not generally considered to be letting agents) play an increasingly important role in the letting process”
Legislation placing requirements on lettings agents are already in place.
This includes provisions contained within the Energy Performance of Buildings (England and Wales) Regulations 2012 and in the Consumer Protection from Unfair Trading Regulations 2008 which specifically states “EPB regulations: a letting agent must secure an EPC commission for the building and, where a property is rented, a letting agent must ensure that the EPC rating is stated on any rental advertisement and commercial media. An agent is in breach of the EPB Regulations may be subject to a penalty charge of £200.00”
Under the Consumer Protection for Unfair Trading Regulations 2018: letting agents who state inaccurate EPC ratings may be in breach of these regulations
The Redress Schemes for letting agencies and property management work (the requirement to belong to a scheme) order 2014 it states that all letting agents join one of the two Government approved Redress schemes. If the letting agent fails to provide an EPC or offers a property without one. They may be in breach of the respective codes of practice and thus in breach of the Consumer Protection from Unfair Trading Regulations 2008.
We would suggest that you speak to your letting agent locally. Or read through the Consultation provided by the Government.