EPC- Legal changes 6 things you need to know
Energy Performance Certificates are required when a property is:
An EPC must be ordered before a property is let or sold.
An EPC contains:
- information about a property's energy use and typical energy costs
- recommendations about how to reduce energy use and save money
An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for 10 years.
The 2018 EPC regulations have been confirmed by the Department for Energy and Climate Change. These changes mean that post 1st April 2018 it will be unlawful to rent a commercial or residential property with an EPC rating of F and G
Important changes that will effect you as a landlord:
1/ Minimum standards for EPCs will apply
From 1st April 2018 as a landlord you will be unable to to grant a tenancy, either new or a renewal, for a property with an EPC or asset rating of F and G (subject to some exceptions where properties cannot be reasonably brought up to that standard). in 2014, 11.75 million EPCs were recorded, with 6.7% (787,000) falling into the F or G rating bracket.
from 1st April 2020 - the minimum rating of E will apply to all existing tenancies
2/ There are some exemptions
Some exemptions will apply i.e.. listed buildings where the works will alter the character, where consent cannot be obtained, or the costs of the works would devalue the property by at least 5% (this would most likely require a surveyors report). There was originally a discussion hat properties that had completed all possible Green Deal work, if they were still in band F and G , that too would be exempt. Although not certain yet, the current discussions are that a landlord will have to spend £5,000 getting the property to a better EPC standard and then it will be allowed to be rented even if still in bands F and G. As this is currently only a discussion it is not clear what evidence of the spending will be required or over what time period the money would have been (for example will it include work commissioned ten years ago?) Landlords in bands F and G should be prepared to spend up to £5,000 to get out of nada F and G.
3/ Further minimum standards are on the horizon
Further to the above suggestions have been made to increase the minimum rating to D in 2025 and then again to C in 2030. From the collated EPCs rating in 2014, over half of the properties currently recorded fall into an asset of D or below.
4/ Implications for you as a landlord
As a Landlord it is in your interest to know the EPC rating of your property and be mindful that if it is and F or G by 1st April 2018 any works need to be completed and a new EPC granted so that tenancies can renewed and issued moving forwards.
5/ Advice moving forwards
Any EPCs that you have had done will contain advice as to how to improve the ratings. If you property EPC rating is F or G it would be advisable to get quotes now for the work that you will need to complete by 1st April 2018.
6/ Is this EU driven and will it still apply post Brexit?
These new minimum energy performance standards (MEPS) were released by the Department of Energy and Climate Change (DECC) on 22nd July 2014 and confirmed by the Government on 5 February 2015. The driver for this sits with climate change and therefore it is believed that the government with move ahead with new EPC ratings and that Landlords need to take note and take action ahead of implementation on 1st April 2018