News Landlords: Ready For 2018 EPC Regulation Changes?

Published by Ben on 11th November, 2017

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Landlords have had a lot to contend with in recent times and it is not as though 2018 looks like providing any respite. This is because there is a big change coming into effect from the 1st of April 2018 and this is related to the Energy Efficiency (Private Rented Property) (England and Wales) Regulations of 2015 and the introduction of the minimum energy efficiency standards (MEES).

From April, landlords will no longer be allowed to grant new tenancies or renew an existing tenancy if the EPC rating of the property is less than an E. As of April 2020, all lets, including existing tenancies, will need to comply with this regulation, which means that there is a countdown for landlords to ensure that their property holds at least an E EPC rating.

There are penalties for non-compliance with the regulations

If a breach has been found, and it is for a period of less than three months, the imposed fine should be the equivalent of 10% of the rateable value of the property. The minimum penalty is £5,000 and the maximum penalty is £50,000 for commercial properties while the maximum for residential properties is £2,000.

When a breach is found to be for a period of more than three months, the imposed fine will be the equivalent of 20% of the rateable value of the property. The minimum penalty is £10,000 and the maximum penalty is£150,000 for commercial properties while the maximum for residential properties is £4,000.

As you would probably expect, there are areas where MEES doesn’t apply, including:

·        A building where there is no EPC or the EPC is over 10 years old

·        A property which doesn’t need to have an EPC, such as some listed buildings, holiday lets or temporary properties, industrial sites or workshops

·        Tenancies which are shorter than 6 months

·        Tenancies which are longer than 99 years

You can see that some of the situations where MEES doesn’t apply is for commercial property.

There are also exemptions to MEES and it is important that landlords are aware of these exemptions because this may save them money, time and a lot of heartache or work. Exemptions include:

·        Situations where a third party hasn’t provided their consent for improvements to be made

·        Where any work to improve the energy efficiency of the property would decrease the value of the property

·        Where all improvements have been made or could be made and the property would still not be able to achieve at least an E rating

·        Where the cost of improving the property would see the landlord out of pocket

The last measure is important as there are many grants on offer to help landlords comply with the regulations. It should be noted that exemptions are only available for a five year period and they cannot be transferred over to another landlord.

Landlords and tenants can benefit from EPC compliance

There are clear benefits to the tenant and landlord from carrying out this work and complying with the regulations. A more energy efficient home helps to save money on heating bills and some experts suggest that moving from a G rating to an E rating results in a saving of more than £1,000 for the average home.

This means the tenant should be able to save money over the course of the tenancy, which is also good news for the landlord. If a tenant is settled, they are more likely to stay, which means landlords don’t need to worry about void periods or finding new tenants.

Given that change is unsettling for many people, there will be many landlords who are not looking forward to the EPC changes as of April 2018. However, many landlords will be unaffected by the changes and there is plenty of support for landlords in ensuring their property complies. There are also benefits for landlords in complying with the regulations, so it is hoped that most landlords will ensure their property is compliant with MEES and the new ruling.

Any landlord or tenant who would like to discuss this matter and see if they are affected should arrange an appointment with TaylorRobinson.