As many property owners are aware, all domestic and non-domestic properties in England and Wales are provided with a mandatory energy efficiency rating. A property’s Energy Performance Certificate (EPC) ranges from A-G, with A indicating that the building is incredibly efficient, whilst G represents a very poor efficiency level.
The energy efficiency of a property can be affected in a variety of ways: heating insulation, the competence of boilers and heating systems, the quality of draft exclusion, double glazing, and even alternative sources of energy (such as solar panels).
In response to a variety of environmental and economic issues, from global climate change to the increasing cost of fuels, the UK government has introduced new minimum standards to ensure buildings are more energy efficient.
In this article, we discuss the recent focus on the energy efficiency levels of rental properties, both domestic and commercial. In April, the new rules will come into force, which both tenants and landlords need to be aware of. We look at these new standards, what properties will be affected, the landlord’s responsibilities, and the penalties faced for not complying with these changes.
The New Minimum Energy Efficiency Standards
It has been estimated that there may be up to 300,000 rented properties that still fall below the minimum required energy efficiency level!
The older the property, the more chance that it has a low energy efficiency rating. The Department for Energy and Climate Change has estimated up to 65% of private rental properties with an EPC rating of F or G were built pre-1919.
From 1st April 2018, all private landlords must ensure that their properties reach an EPC rating of E. This new standard applies to all rented properties, regardless of whether they are domestic or commercial.
This regulation will only be enforced when new tenancies are granted after the 1st April, but it will apply to both new and existing tenants in cases where tenancies are renewed.
However, the new minimum energy efficiency standard will be applicable to all privately let domestic properties from 1st April 2020 even if no change is made to the terms of tenancy, and to all commercial properties from 1st April 2023.
So, what properties will be immediately affected as of 1st April 2018?
All private landlords need to be aware that if any new tenancy is created after 1st April 2018, the property must comply with the new regulations or they could potentially face legal action.
The creation of a new tenancy includes (but is not limited to) situations where:
- A new assured tenancy or assured shorthold tenancy is granted;
- An existing assured tenancy or assured shorthold tenancy is renewed or extended;
- The fixed term of an assured tenancy or assured shorthold tenancy comes to an end and the tenancy becomes a statutory periodic tenancy (i.e. a rolling tenancy);
- A family member succeeds a Rent Act protected tenancy;
- A new tenancy is granted to a Rent Act protected tenant.
The requirements also apply to properties being let as part of a building which is required to have an EPC. This includes apartments, commercial units in a block, shared premises, and domestic units that are not self-contained, such as a bedsit.
Are there any properties excluded from the rules?
There are some exceptions, but very few. As a general rule, the new standards apply to any property that requires an EPC under the current regulations. However, the four main exclusions are:
- Officially protected domestic properties, such as listed buildings. However, this is only the case where compliance with the energy efficiency requirements would unacceptably alter the property’s character or appearance.
- Temporary residential buildings that are intended to be used for less than two years.
- Part-time residential buildings that are used for less than four months of the year.
- Very small residential buildings that have a usable form of less than 50 square metres.
If your property does not fall within the above descriptions, it is very likely that the new standards will apply to it. It is also important to remember that all commercial (non-domestic) properties are included in the new requirements.
What Penalties Could Landlords Face for Non-Compliance?
There are a number of penalties that can be enforced upon any landlord or property owner who fails to comply with the new standards and continues renting any eligible property that doesn’t meet the minimum EPC E rating.
These penalties include:
- The property being prohibited from further rental until improvements are made to meet the necessary standard;
- Mandatory improvements being ordered at the landlord’s cost;
- An immediate fine of up to £5,000.
The sums for each fine are fixed, but may also be cumulative. The fines for non-compliance include:
- Providing false or misleading information to the PRS Exemptions Register – £1,000
- Failure to comply with a compliance notice from a local authority – £2,000
- Renting out a non-compliant property (less than three months’ non-compliance) – £2,000
- Renting out a non-compliant property (three months or more of non-compliance) – £4,000
If a landlord continues to rent out a non-compliant property or renews a tenancy whilst non-compliant, they may receive further penalties. The new energy efficiency regulations will be enforced by Local Authorities for all domestic properties and local Weights and Measures Authorities for commercial properties.
Seek Expert Property Law Advice Today
At Hook & Partners, our expert Property Law solicitors based in Canvey Island can provide help and advice on these changes for both domestic and commercial properties.
If you’re a landlord who is worried that you may not be compliant, or a tenant who is renting a property that doesn’t meet the new minimum energy efficiency standards, contact us for information about your rights. Alternatively, give us a call on 01268 692255 or email info@hookandpartners.com.
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