DEADLINE LOOMING FOR BAN ON LETTING OUT ENERGY INEFFICIENT PROPERTIES

Published 12 March 2018

energy performanceThe end of this month sees an important change in the rules governing the energy-efficiency of residential lettings properties – and it means that some older homes will no longer be permitted to be rented out.

As from 1 April, any property rented out in the private sector will have to have an Energy Performance Certificate (EPC) rating of ‘E’ or above.  From that date, it will actually be unlawful to rent a property which does not meet that standard (with a few exceptions) – and there are penalties of up to £4,000 for landlords who ignore the new rules.

This applies to any new tenancy entered into after 1 April, including the renewal or extension of an existing assured tenancy.  There are just a few exemptions, but for the majority, these are now the rules.  If you are the landlord of a property with a ‘F' or 'G’ rating, you will not be able to let it out until you have undertaken work to bring its EPC rating up to ‘E’.

For landlords where there are continuing tenancies, the deadline is still two years away: the new rules will apply to them from 1st April 2020.

As with any government regulation, the small print is myriad and complex.  There are some exemptions: these mainly revolve around historic or listed buildings, and buildings where making improvements to bring the property up to an ‘E’ rating are not ‘cost-effective’ (which is defined in the rules as capable of being installed within the government’s Green Deal ‘Golden Rule’).

Just to make it less easy to understand, the government has decided to re-calibrate EPCs on the basis of research which has shown that they currently understate the thermal efficiency of solid walls.  So a property with a current ‘F’ rating may end up being given an ‘E’ rating, and be OK to rent out after all.

If all of this sounds complicated, it is - and the consequences of getting it wrong are considerable.  Local authorities will be able to issue penalty notices, and the amounts are fixed, and severe.  Renting out a non-compliant property will result in a £2,000 penalty if the non-compliance is less than three months; that rises to £4,000 after three months’ non-compliance.

As with most areas of regulation, it pays to take expert advice to ensure you are complying.  The rules on energy efficiency of residential letting property are only going to get tougher over time.  The head-in-the-sand approach is no longer an option.

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