EPC legislation changes affecting EVERY rental property are imminent

I’ve been really busy closing off January. Last week I spent a lot of time chatting with landlords and potential investors, giving advice on rental rates and property investment.

Something that I wanted to bring to your attention once again, is the imminent changes to the minimum energy efficiency standard (MEES). I first mentioned this back in October but time moves fast and with the changes due in April, it’s in the forefront of my mind. And if you are landlord, it should be in yours too.

To give you a quick recap, as you probably know, every property must have an EPC (Energy Performance Certificate) whenever it is sold or let. The EPC evidences how energy efficient the property is. Certificates are graded from A to G; A indicating the highest level of efficiency, G the lowest rating.

The EPC legislation changes that become effective in April, mean that all rental properties in England and Wales will have to meet a minimum energy efficiency standard (MEES). This has been set at an E rating for all types of domestic and non-domestic properties. The bottom line is, if you don’t have an EPC rated E or above, it will become illegal to enter a new rental agreement on your property.

If you have an existing tenancy agreement in place and a EPC rating or F or G, don’t panic. Existing tenancy agreements are not affected by the changes… yet. The regulations only apply when granting:

  • a new tenancy to a new tenant, and
  • a new tenancy to an existing tenant, i.e. any extension or renewal to an existing tenant.

However, from 1st April 2020 the regulations will apply to ALL privately rented properties in scope of the regulations, so it is still something to bear in mind.

Landlords are required to get a new EPC certificate every ten years and it’s important to note that existing EPCs cannot be adjusted. So if your property is affected by the EPC legislation changes, you need to act now. And there is still time to remedy the situation. The first step I would suggest is to arrange for a new EPC inspection to be carried out. The calculations for EPC grading changes regularly, so it is possible that without doing anything, you will receive a different rating to the one you received before. Of course, if you only recently received your EPC, then that is less likely. However, every EPC report contains a list of recommended measures for improving your property’s energy efficiency performance. So that is step two; review your recommended measures. There is any number of ways to improve your rating. Prime examples being:

  • cavity wall insulation
  • flue gas recovery devices
  • draught proofing
  • improved hot water showers/systems
  • fan assisted replacement storage heaters
  • loft or rafter insulation (including loft hatch insulation)
  • replacement glazing
  • thermostat room heaters
  • high performance external doors
  • hot water controls (including timers and temperature control)
  • pipework insulation
  • gas fired condensing boilers

Although at first look all of this sounds like added expense to you, any of these improvements would significantly improve the rental potential of your property. Not only that but your maintenance costs and bills could be reduced, which benefits you and your tenants. Plus some tenants may be willing to pay more for properties that are energy efficient.

There are a few properties that are exempt from the rule changes, such as the property being listed or officially protected. A full list of EPC exemptions can be found on the government website but these only apply in a relatively small number of cases.

I can’t express how important it is to comply. Unless there is an accepted exemption, landlords could face a penalty of up to £5,000 for failing to meet the minimum efficiency standards.

As always you can reach me at hasan@home-share.co.uk, connect with me via LinkedIn or join our discussion group over on Facebook, if you’d like any advice or guidance.

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