Landlords letting out residential or commercial properties in England and Wales must ensure that they meet new energy efficiency standards from 1 April.
According to Kate Russell, policy and technical adviser at the Central Association of Agricultural Valuers (CAAV), it will be illegal to let out a property if its Energy Performance Certificate (EPC) band is F or G.
“However, the rules are quite complicated, so it’s worth seeking professional advice to check whether and when you need to comply.”
At the moment the new rules apply to new tenancies and renewals or extensions of existing tenancies, but from 1 April 2020 they will also apply to existing domestic tenancies – and from 1 April 2023, to existing non-domestic tenancies.
There are potential traps for the unwary, according to Ms Russell. “The rules on renewals and extensions of leases are not straightforward. For example, landlords of residential property should be aware that when the initial fixed term of an Assured Shorthold Tenancy ends and it becomes a periodic tenancy, the new rules will then apply,” she explains. “Anyone who owns a let property with an EPC of band F or G should take advice on how the new rules might affect them.”
One key question is whether the rules apply to listed buildings or those in conservation areas. “Government officials still cannot give us a yes or no answer to that, so landlords will have to decide on the appropriate action,” says Ms Russell.
Where a let property is in band F or G, landlords may be able to apply for an exemption to allow the letting to go ahead. “Exemptions must be registered on the official register before the start of the tenancy and most only last for five years.”
Grounds for exemption include where a landlord has done everything possible to upgrade the energy efficiency, but the EPC band is still F or G. For domestic dwellings, the Government is proposing a cap so that landlords must contribute up to £2,500 per property, including grants, towards the energy efficiency improvements. For non-domestic property the landlord’s contribution is set at a level which can be paid back in seven years through the energy savings.
Other grounds for exemption include where the tenant or a necessary third party refuses consent – which could be the listed building officer, says Ms Russell. “There are also a number of temporary exemptions to cover the purchase of property which is already subject to a lease, for example.”
The local authority is responsible for enforcing the new regulations, and can fine landlords £2,000 per domestic property and £5,000 for non-domestic property, she adds. “It’s therefore worthwhile checking all of the details to check whether you need to – and do – comply.”
For more information, please visit: www.caav.org.uk