From 1st April 2018, Minimum Energy Efficiency Standards regulations will come into force making it illegal to let most properties that don’t achieve a minimum Energy Performance Rating of E. It forms part of the government initiative to lower carbon emissions which is good news for the planet but not so good news for struggling landlords with tenants who refuse to pay their rent.
The Government has set the country some ambitious targets between now and year 2050, these targets include all buildings emitting close to zero carbon emissions, taking all diesel cars off the road and introducing minimum energy efficiency standards (MEES). Over the longer term, properties will have to have an energy performance certificate (EPC) rating of A. This is just the beginning.
In 2015, the Government brought in the legal requirement for landlords and agents of residential and commercial properties to display the energy performance rating when marketing properties to let and from April 1st 2018, any buildings which do so will have to have an EPC rating of at least E. Anything below will not be sold or rented unless your property has reason for exemption.
Where a landlord believes that an F or G EPC rated property they rent qualifies for an exemption from the minimum energy efficiency standard, an exemption must be registered on the National PRS Exemptions Register. The register service is currently running as a pilot. Landlords who wish to register an exemption for a domestic or non-domestic property as part of this pilot should e-mail the BEIS minimum standards team at [email protected] – Gov.uk
For the purposes of this article, we assume your property does not have a valid reason for exemption.
So, what is an EPC?
An energy performance certificate (EPC) is a document you legally must have before you market the property for sale or to let. It sets out how efficiently your property uses energy, you’ll also find EPCs attached to most home and kitchen appliances (including televisions). It comes in ratings of A (the highest) to G, (most inefficient) and serves as an indicator to both for you as a landlord or homeowner and any potential tenants or buyers as to how high (or low) their energy bills may be.
If your property is currently rated below E, you will have to make changes to ensure it meets the required minimum standards and if you don’t, things can become costly.
Penalties range up to £5,000 and will depend on the severity of the infringement. The levels of severity are as follows;
- Providing false or misleading information to the PRS Exemptions Register: £1,000
- Failing to act on and comply with a compliance notice from your local authority: £2,000
- Renting out a non-compliant property for less than three months: £4,000
- Renting out a non-compliant property for more than three months: £5,000
Notices of Contravention will also be published by local authorities which may harm your reputation.
How do I get an EPC?
If you haven’t yet started marketing the property then you must have it published with any of your property adverts both online and offline within seven days of that advert going live. So, the Government have been kind and given a 21 day grace period, beyond this, you’re stuffed. There’ll be no excuse for ignorance of the law and landlords, vendors and property investors should brace themselves for hefty fines if this is something they think they can brush under the carpet, after all, you might not get caught, right?
To get one you should have your property inspected by a qualified domestic (or non-domestic if it’s a commercial property) energy inspector. They will then issue you with an EPC (non-domestic EPCs are called NDEPC). You must also provide a copy of the new EPC rating to any tenants already living in your property.
Once issued, it goes onto a database and is valid for 10 years. However, you might decide you want to have it redone, especially if your property doesn’t meet the minimum standard. This is useful to consider as the higher an energy efficiency rating, the higher the selling point of energy efficiency is for your property. It’s that simple.
How to increase your EPC rating
There are lots of ways to increase your EPC rating and an EPC Assessor will advise you on the best course(s) of action to take to improve your EPC rating, especially if it doesn’t meet MEES. Some things you could do are;
- Install a new, more energy efficient boiler (Economy 7 is often recommended).
- Install draught-proofing.
- Install insulation (cavity and loft).
- Install an automated thermostat.
- Replace halogen light bulbs with LEDs.
- Install double or triple glazing and replace seals, 10% of heat is lost through closed windows (much more heat is lost through open windows, mind you).
- Replace old appliances with more energy efficient appliances in furnished properties.
Of course, all of this costs money but over time, the money you (or your tenants) will save will mean the improvements pay for themselves plus massively increase the likelihood of sale over similar properties with lower ratings. A high EPC can really set a property apart from the rest of the market.
How to get an exemption from MEES
For some landlords, though, for whatever reason (can’t afford it, don’t want to pay for it or simply can’t), will not be able to meet the minimum energy standards, in which case you can apply to Leicester City Council (or your local council) for an exemption. Here are the exemption criteria:
- Consent from a third party has been denied. For example, a tenant might refuse entry to tradespeople to carry out the works or refusing to allow adaptations to be made.
- If the changes are not appropriate or would negatively affect the value of the property. For example, most listed buildings and period properties.
- You’ve made all the changes you can and it is still rated below E. For example, the property is an HMO (be mindful of minimum room sizes).
Exemptions last for five years and for listed properties and period buildings, they may be more hassle than they’re worth especially when non-compliance comes with a £5’000 price tag so think twice before taking out that mortgage for the bargain dated property you’ve found OnTheMarket.com, it’s likely the reason for thebelow market value property deal is MEES.
If you already have a valid EPC, you will not need to get a new one as long as it isn’t older than ten years old. Of course, you may want to get a new EPC if you do carry out any improvements and you’ll have to if your previous EPC is lower than an E rated come April 1st 2018.