EPC minimum standards are changing, are you ready?

As a landlord you will be aware that all rental properties let under an Assured Shorthold Tenancy Agreement (AST) are required to have an Energy Performance Certificate (EPC), but you may not yet know about the impending changes to EPC legislation, and how they could make your property un-rentable.

What does this mean?

It will soon be illegal to let a property with an energy efficiency rating of below an E.

When will the changes be enforced?

The new changes to the EPC legislation will be enforced as of 1^st April 2018.

Why is it changing?

According to government research, nearly one in five properties fall below an E EPC rating, but why does this matter? Currently, energy used in non-domestic buildings is responsible for around 12% of the UK’s emissions. The new standards plan to tackle the amount of energy used and reduce emissions across non-domestic stock is starting with the very least energy efficient properties. Properties that are rated F or G on their EPC are contributing more to the country’s greenhouse gas emissions and placing an unnecessary cost on business and the wider economy by wasting energy.

Where can I find out more?

To avoid penalties from £5,000 up to £150,000 it’s essential that your rental property complies with these new changes before 1^st April 2018. You can download your copy of the Non-domestic Private Rented Property Minimum Standard – landlord guidance to read about the changes, or contact your local Anthony Pepe branch to discuss your queries.

How can I ensure my property complies?

To ensure that your property meets the new minimum standards by April 2018, certain improvements have been documented in the government’s Property Minimum Standards – landlord guidance. The Green Deal (Qualifying Energy Improvements) order schedule includes the following suggestions:

• Cavity wall insulation
• Draught proofing
• High performance external doors
• Replacement glazing
• Roof insulation
• Under-floor heating and insulation

Which properties are exempt?

It’s important to know that any exemptions are made personally to the landlord and may not pass over to a new owner or landlord.

There are a number of exemptions, but these are not automatically given.  To ascertain if your property qualifies for an exemption you will need to provide details and evidence of the exemption to a centralised self-certification register, namely the PRS Exemptions Register.

If your property is listed, you may have a case for exemption where “compliance with certain minimum energy efficiency requirements would unacceptably alter their character or appearance.” Landlord Guidance .

Allowances are also made for new landlords taking on a property after 1 April 2018 with a below E rating, giving you 6 months to undertake the necessary works.  All other exceptions and exemptions also have time restrictions, this is currently said to be five years, after which time you will need to reapply.

You can find more details about exceptions and exemptions in the landlord guidance.

How will these changes be enforced?

If your local authority believes that you are in breach of the minimum level of energy efficiency, they may issue a compliance notice, or a penalty can be enforced in response to the infringement. If your property is in breach for less than three months the penalty is up to either £5,000 or 10% of the rateable value, with a maximum penalty of £50,000, whichever amount is greater. For three months or more in breach, the penalty is either £10,000 or 20% of the rateable value, with a maximum penalty of £150,000, whichever is greater.

We believe it is important to stress that we expect that the Minimum Level of Energy Efficiency will rise above an E in the future.  Therefore, if you have to undertake works we would suggest setting your sights higher than just achieving the minimum requirement in order to prevent any void periods due to additional works further down the line.

For an honest conversation about how this will impact on your property portfolio, please contact your local Anthony Pepe branch.