To be a successful landlord it is important to stay on top of property legislation. This is not just a matter of keeping tenants happy: careless landlords often find themselves having to pay huge fees, especially if they offend across multiple properties.
One of the most important changes in recent history is the implementation of the Minimum Energy Efficiency Standard (MEES). While properties were previously required to have a valid energy performance certificate (EPC), this new legislation means that properties can only be let when they have a rating of E or above. In other words, creating a tenancy agreement for a non-exempt property with a rating of F or G is now against the law.
However, this need not be seen as a hassle. Improving the energy efficiency of a property will not only lower its monthly heating bills, it can also help to attract higher paying tenants who are after features like double glazing or loft insulation. On the other hand, failing to adhere to this law can result in fines of up to £5k per tenancy!
So, what exactly do landlords need to know about energy efficiency standards?
An EPC is a professional assessment of a property’s energy efficiency. It takes into account individual factors unique to each property, before providing an overall rating from A to G, with G being the lowest grade possible.
That said, an EPC is more than just a rating. It will also offer useful recommendations on how the energy efficiency of a property can be improved. This can be invaluable information if your rating needs to be raised!
Energy performance certificates are usually created by domestic energy assessors, though certain electricians may also be qualified. They generally cost between £60 and £120 and are valid for ten years.
Remember, a valid EPC is required to even put a property on the market, regardless of its rating.
While it is true that properties require an EPC before they can be put on the market, either to rent or sell, not all properties are subject to the MEES.
For example, your rental property could be exempt from the new minimum standard if you can show:
If your property is exempt, it is important that you register it via the Public Exemptions Register, or you may still be held accountable for the new rules.
When a property does require an EPC, the landlord cannot grant a tenancy for it to new or existing tenants if it has a rating of F or G. As of April 2020, landlords may not continue letting properties that fall below the new minimum standard.
Luckily for landlords, they are not necessarily expected to pay for energy related home improvements completely out of their own pockets. There are a number of potential grants from the Green Deal, ECO and even local authorities.
There are a number of popular improvement projects which can boost the energy efficiency of a property, such as installing insulation, replacing an inefficient boiler or introducing renewable energy. However, which method will work best varies from property to property. This is why it is important to have a valid EPC, as this will list the best jobs to suit you.
You may want to start by getting in contact with your energy supplier. The energy company obligation (ECO) gives ‘obligated suppliers’ green targets based on their share of the domestic energy market. In other words, big companies like British Gas and EDF Energy each have targets to improve energy efficiency by a certain amount.
This is usually done via supporting home improvement projects. If you get in touch with your supplier, they may be willing to help pay for any necessary work. Some will even help facilitate jobs for non-customers if it means meeting their targets.
An important thing to keep in mind is that landlords are not expected to carry out work which is not considered appropriate, which they cannot get consent for or which is cost-neutral. If you can demonstrate this with documentation, you could be eligible for a five year exemption.
You could have a case for exemption if:
The rules for energy efficiency are enforced by local authorities. If they suspect that a residence is non-compliant and the landlord cannot provide evidence of an exemption, the landlord can be served with a ‘compliance notice’ requesting further information.
In a case like this, the landlord will essentially be facing a case of ‘guilty until proven innocent’. If they cannot provide the documentation to prove that they have acted in accordance with the law, or if what they provide is insufficient, they can be served with a ‘penalty notice’.
Penalty notices for a single property can be cumulative, up to the value of £5,000. A landlord could be fined for:
It is important to keep in mind that further penalties may be awarded when an offending landlord takes on a new tenant, or once the new regulatory backstop comes into effect. Landlords with a portfolio of offending properties could easily end up seeing fines in the tens of thousands!
If you receive a notice and feel that it is unfair, you can request a review. The council will then assess it and, if they feel the evidence is not satisfactory, withdraw the notice. However, if the notice is upheld then you will be required to appeal to the First Tier Tribunal.
Valid reasons for an appeal include: