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New Energy Efficiency Regulations for Rented Property in 2018
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Overview

From the 1st April 2018, it will be a legal requirement for all privately rented properties across England and Wales to have at least an E rating on it’s Energy Performance Certificate (EPC).

These regulations will affect all residential and commercial properties, so, landlords will need to ensure that their property is at the minimum standard before granting any new tenancies or renewing any existing ones.

The regulations will then apply to all existing residential properties from April 2020 and all existing commercial properties from April 2023 (properties where there has been no change to any tenancy agreements, not just new lettings).

Any properties with a rating of F or G will be declared as ‘sub-standard’ and will be illegal to let out and any breaches of these regulations could see landlords facing huge fines.

All sub-standard properties will need to have improvements made so they reach the minimum standard, unless they are exempt from the regulations.

 

What is an EPC?

An EPC contains:

  • A rating of how energy efficient your property is. The rating is from A to G (with A being the highest level of efficiency).

  • The estimated energy costs of your property, including; lighting, heating and water.

  • Recommendations of ways to reduce energy usage and save money.

  • Summary and rating of how efficient certain features are, including; walls, floor, roof and windows.

It is a legal requirement for a property to have an EPC every time it is sold or rented. The certificate is then valid for 10 years.

 

What Properties are Exempt from the Regulations?

  • When the property has no improvements that can be made, or the landlord has done all that they can and the property is still sub-standard.

  • When the improvements made would reduce the property’s market value by 5% or more.

  • When certain required energy improvements need consent from a third party which has been refused or has been given with uncompilable conditions.

  • If, in the rare circumstance, a person has become a landlord suddenly and it would be considered unreasonable to require them to conform with the regulations straight away.

If a property is exempt from the regulations because of any of these reasons, the case must be registered on the National PRS Exemptions Register. The exemption will last for 5 years, after which, the exemption will be removed and the landlord is required to try again to make improvements. If this is not possible, another exemption can be made.

If a registered exempt property is sold, the exemption can not pass over to the new landlord or owner. The exemption will cease to be effective and the new owner/landlord will have to either make any improvements to make the property reach the minimum energy standard or register a new exemption if the improvements are not possible.

 

What are The Penalties?

If a property fails to meet the minimum required energy efficiency rating and the landlord makes a breach of the regulations by continuing to let out the property, they will find themselves facing hefty fines.

The power to impose a financial penalty falls with the Local Authority. They can decide the amount of the penalty, up to the maximum amount set.

Below are the maximum penalties

Residential Penalties

  • When a landlord has breached the regulations by letting out a sub-standard property for less than 3 months, the maximum penalty is £2,000.

  • When a landlord has breached the regulations by letting out a sub-standard property for 3 months or more, the maximum penalty is £4,000.

  • If a landlord registered false or misleading information on the PRS Exemptions Register, the maximum penalty is £1,000.

  • If a landlord fails to comply with the compliance notice, the maximum penalty is £2,000.

Note: If the breach falls under two or more of these penalties, the fine can not total more than £5,000.

Commercial Penalties

  • When a landlord has breached the regulations by letting out a sub-standard property for less than 3 months, the maximum penalty is £5,000 or up to 10% of the property’s rateable value (whichever is greater – subject to a maximum of £50,000).

  • When a landlord has breached the regulations by letting out a sub-standard property for 3 months or more, the maximum penalty is £10,000 or up to 20% of the property’s rateable value ( whichever is greater – subject to a maximum of £150,000).

  • If a landlord registered false or misleading information on the PRS Exemptions Register, the maximum penalty is £5,000.

  • If a landlord fails to comply with the compliance notice, the maximum penalty is £2,000.

Note: All of the above residential and commercial penalties can be served with a publication penalty.

This means that the details of the landlord’s breach will be published on the publicly available section of the PRS Exemptions Register. This information may include; the landlord’s name, details of the breach, the address of the property in relation to the breach and the amount of the financial penalty paid.

The authority can decide what details are published and how long this information remains published on the register for, but it will be for at least 12 months.

 

What Improvements Can be Made?

There is a huge number of different measures that can be taken to improve the energy efficiency of the property.

Below are just some examples;

  • Wall, floor and roof insulation.
  • Double glazing on windows.
  • Solar panels.
  • Draught proofing doors and windows.
  • Replacing old light bulbs with LED bulbs.
  • Hot water controls (temperature and timers to avoid overuse).
  • Air source heat pumps.

 

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