‘Washing machine energy ratings for houses’ was the phrase one landlord told me a few years ago when we were talking about the colour bar chart graphs that every property has had for over 10 years now. Now these weren’t brought in to use the whole palate of ink in people’s printers, but to increase the energy efficiency of the UK’s housing stock. The vast majority of landlords are, by now, acquainted with the legislation that came into force on the 1st of April 2018, that means all new and renewed private tenancy agreements must have an Energy Performance Certificate (EPC) rating of E or above, otherwise it would be illegal to rent the property out (EPC ratings go from A to G – A being the best and G the worst).
Yet, from 1st April 2020, those rules will be extended to also cover existing tenancies, meaning that under the new legislation, properties with an EPC rating of F or G will be classed as unrentable – meaning it will be illegal to rent the property and the landlord will be liable for a fine of £5,000.
Back in 2018, there was a loophole for landlords of F & G rated rental homes on new tenancies, where they did not need to upgrade the property for five years if it cost them money (called the ‘no cost to landlord’ exemption rule) – yet back in April 2019 this exemption to improve rental properties was removed – so they too are included in these new rules. Therefore, this means that landlords must, at their own expense, improve their St Albans properties to at least an EPC band E.
Now this requirement to upgrade the property is subject to a spending cap of £3,500 (including VAT) for each rental premises, as landlords only need to spend what they need to, to bring them to a minimum level.
In cases where a landlord is unable to improve their property to an EPC rating of E within the £3,500 cap, then they still need to spend that money and carry out the most appropriate measures which can be installed up to the £3,500 cap. They then need to register an exemption (with 3 quotes from 3 contractors) for their property on the basis that all relevant improvements have been installed and the property still remains below an E.
If you are a self-managing landlord or a landlord with another agent, then it will be prudent to act now. The last thing you need is a £5,000 fine on top of the £3,500 improvement bill!
One final thought though – it might be wise for landlords who have had their rental properties for a while now to get a new EPC carried out as recent research has also acknowledged that some early EPCs understated the thermal efficiency of solid walls. There are many rental properties that are pre 1925, which is when most (not all) new properties were built with cavity walls, the Dept for Business, Energy and Business Strategy have now recalibrated EPCs to give a truer result. This probably means that some solid wall properties, Victorian and Edwardian terraced houses and converted flats, presently rated F under an EPC will no longer require any improvement works and certainly less building work may be needed in the case of a G rated rental property.
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