Landlords have been required to ensure that any residential property that they lease has an EPC rating of at least an E since 1 April 2018, unless they have registered that it is exempt on the National PRS Exemptions Register under the rules in the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES Regulations).
What will these changes mean for landlords?
Up until the 1st April 2019, the landlord could state that the property was exempt since they could not recommend anything that they could do to bring the property the minimum energy level that would not bear a cost on the landlord (the No Cost exemption). However, after this date, the law is going to change so that there is now a cost cap of £3,500. The funding can come from the landlord and includes any third-party funding that the landlord manages to obtain, for example, local authority grants and Green deal finance.
From 3rd March 2020, all No Cost Exemptions will be cancelled on the National PRS Exemptions Register regardless of when they were registered.
The reason for the change is to prevent landlords from renting properties privately to tenants that are difficult to keep warm. Making rented property energy-efficient is a means of tackling fuel poverty and bringing down heating bills for tenants, saving them an average of £180 per year. The changes are expected to affect around 200,000 landlords.
The landlords must consider all the energy efficiency improvements that any EPC or energy efficiency report recommends and implement changes up to the value of £3,500. The property can still be registered as exempt if it does not reach a level E after this level of investment is made in the property. The landlord will need to prove that £3,500 worth of energy efficiency improvements have been carried out and that any further energy efficiency measures required to satisfy the EPC E rating would cost more than £3,500. This would need to be evidenced with quotes from three different installers.
Another factor that has been changed is that previously a property could be exempt if the works were prevented due to the tenant refusing consent. From the 1st April 2019, once the tenancy ends then the exemption ends and the work then needs to be completed. The property can then go back onto the exemption register if it qualifies after the work has been performed.
What are the consequences for landlords if they do not comply with the new rules?
Failure to comply with the new regulations could result in landlords being fined up to £5,000 by their local authority as well as having their details published in the PRS Exemptions Register.
The Government has proposed that they are aiming to change the energy performance standards to a rating of C in as many rented properties as possible by 2030.
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