Get Ready for EPC Changes
Published: 30 July 2015
On 1 April 2018 the Government’s minimum energy standards will come into force in a bid to cut energy bills and carbon emissions. Currently almost 10% of England and Wales’ privately rented homes and 20% of commercial properties fall below this level which could prove a headache for the unwary, so Landlords need to start considering their properties’ energy ratings now so as not to be caught out when the Regulations come into force.
What level energy standard must be met?
All rented properties must be brought up to a minimum standard of E by 1st April 2015. Energy Performance Certificates (EPC) indicate the estimated amount of energy needed for the standard use of a building (with band A being the most efficient to band G the most inefficient). This means that any property rated F and G will not meet the required stdard and will have to be brought up to E to comply with the new Regulations.
Who will be affected?
The Regulations apply to new lets and tenancy renewals from 1 April 2018 and will then apply to all existing tenancies on 1st April 2020. The Regulations will also affect the following types of tenancies:
- Properties let under an assured tenancy or an assured shorthold tenancy;
- Regulated tenancies for the purposes of the Rent Acts; and
- Properties let:
- On assured agricultural tenancies;
- On tenancies which are protected under the Rent Act 1976; and
- On statutory tenancies under the Rent Act 1976.
What does this mean for Landlords?
These Regulations could have the following serious implications for both landlords and occupiers who wish to assign or sublet a property:
- No Landlord will be able let or renew a lease if the property falls below an E rating, although if the property is rated F or G Landlords will be able to continue letting for the remainder of the existing contract.This essentially means that marketing some properties will become impossible until they are upgraded.
- Landlords who fail to comply with the new energy standard could face a substantial penalty.
- Tenants living in F and G rated homes will be able to request improvements which could involve great expense on the part of the Landlord. However any Landlord that fails to comply with the request could be forced to pay a penalty notice.
- Rent reviews could also be affected if a property’s energy rating is below E.
Considering these risks to property owners and occupiers it is clear that Landlords need to take precautions now to protect their interests in 2018. These should include obtaining a full understanding of the energy efficiency of every property and assessing the costs of undertaking refurbishments. Further, some Landlords may wish to consider bringing properties forward for marketing prior to 2018.
Landlords should also bear in mind that the Government aims to increase the minimum energy standard rating to a C by 2030.
If you would like to discuss any issue relating to the new minimum energy standards or would like to identify the potential impact of the legislative changes on your property portfolio please contact one of our Property Team partners: Paula Abrahamian, George Cselko, Maria Guida or Gary Nelson.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.