Rented property: act now to comply with new energy efficiency laws

Do you rent out residential or commercial property? Are you aware of the new energy efficiency rules being introduced from April 2018? Failing to comply with the new laws could affect your property’s value and marketability.

Energy Performance Certificates (EPCs) have been around since 2007. Any property being marketed for sale or rent must have an EPC setting out details of the property’s energy efficiency.

Properties are surveyed by an energy assessor who grades properties on a scale of A to G. A-rated properties are highly efficient whereas properties at the other end of the scale are considered inefficient. The EPC can be viewed by any buyer or tenant and will often set out recommendations for improving the energy efficiency of the property.

It is probably fair to say that whilst EPCs are a legal requirement, they tend to receive only a cursory inspection by parties to a property transaction. However, as a result of new rules being introduced in April 2018, property owners and buyers will have to pay rather more attention to the energy rating of a property. From this date, it will be unlawful to let to a new tenant any property, either residential or commercial, which has an EPC rating of F or G. This will include sub- letting properties and assigning existing leases. There will be certain exceptions such as where Green Deal (or equivalent) funding is not available to fund improvements.

From April 2016, tenants will be entitled to ask landlords to make improvements to a property whatever the existing rating. Similar exemptions will be available.

Trading Standards officers will enforce these new laws and landlords can be fined if they are in breach. Clearly, there will be cost implications where a landlord seeks to rent out a property which does not meet the minimum standards. The owners of such properties may also find that the properties are less marketable and valuations may be affected.

This drive to improve the energy efficiency of all housing stock will lead to potential buyers placing far more importance on the EPC, and landlords are encouraged to plan for the new laws now so improvements and refurbishments can be undertaken in good time before the changes are brought in.

If you would like any more information regarding the changes please contact a member of our Landlord and Tenant team.