Energy Performance Certificates (‘EPC’) – Legislative changes affecting rental properties from April 2018

19th March 2018

Introduction - What is an EPC?

All domestic and commercial buildings in the UK that are available to buy or rent must have an Energy Performance Certificate (‘EPC’). By obtaining an energy performance survey, it will allow you identify ways to save money on your energy bills and improve the comfort of the property.

What is changing?

From April 2018, important changes will be implemented in relation to the minimum EPC requirements for rental properties in the UK.  

The law will require that every rental property has an energy efficiency rating of at least an E rating and this will apply to both new and existing tenancies that are being renewed or extended from April.

Any properties with a rating of F or G will be seen as unfit for rental. In this case, appropriate measures need to be taken in order to improve the energy rating to the minimum E rating. It is the responsibility of your local authority to ensure that your property has a minimum energy rating. If the Local Authority discover that your property is below this standard, they may issue a fine up to £5,000 and will accordingly prevent you from renting the property. Please refer to the implications of non-compliance below.

How can you improve your properties energy efficiency?

You may be able to improve your energy efficiency by doing one or more of the following:  

  • Ensuring any cavity walls are filled with insulation materials, such as foam or beads;
  • Replacing an old boiler for a newer, more efficient model;
  • Ensuring the loft insulation is at least 270mm deep which will allow heat to stay inside the property.

Are there any exemptions?

There are certain exemptions to this new EPC minimum rating, including the following:

  • If the improvement works required will devalue the property by 5% or more;
  • If the landlord cannot obtain consent to carry out the improvement works e.g. from the tenant, mortgage lender or superior landlord;
  • If the landlord cannot afford to carry out any improvement works;
  • If the relevant improvement works have been undertaken but the energy rating still remains under a rating of E.

What are the implications of non-compliance?

As a result of non-compliance, the Local Authority can decide to impose a financial penalty and they have the option to decide on the amount of that penalty. Such penalties may be up to the maximum limits set by the Regulations. In the event that you are less than three months in breach the penalty for renting out a non-compliant property is up to £2,000.00. However, if you are more than three months in breach the penalty is up to £4,000.00. In addition, the following penalties apply:

  • Any false or misleading information registered by the landlord on the PRS Exemptions Register, the Local Authority may impose a financial penalty of up to £1,000.00;
  •  Any failure to comply with a compliance notice, the Local Authority may impose a financial penalty of up to £2,000.00.

In the event that penalties are imposed under more than one of these paragraphs mentioned above, the total amount of the financial penalty may not be more than £5,000.

What is next to change?

In addition, from April 2020, landlords will not be allowed to rent their property at all if the energy rating is F or G, even if there are tenants inside the property and in their contract.

Where can you get further guidance?

Further guidance can be found on the government website:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/669587/
Domestic_Private_Rented_Landlord_Guidance_-_Updated_Version.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/656541/Non-Dom_Private_Rented_Property_Minimum_Standard_-_Landlord_Guidance.pdf