Changes in Law Regarding EPC

Electric safety

The landlords of almost 300,000 properties will need to upgrade their energy efficiency by April or face several thousands of pounds in fines. The worst-rated properties in the country must be improved to a new minimum standard before a new tenancy in the private-rented sector can be offered. In 2020, no existing tenancies can be extended unless they satisfy the new criteria.

According to the latest English Housing Survey, released in 2017, 6.3% of the 4.5 million properties in the private-rented sector were rated an “F” or “G” – the lowest possible – in 2015-16. This means there could be as many as 285,000 properties in need of work.

As a minimum, homes must be upgraded to an “E” rating. Additionally, the Government’s Clean Growth Strategy aims to upgrade every home to a “C” rating by 2030. Currently only 26pc of privately rented homes satisfy this requirement.

From 1 April 2018

It will become unlawful for landlords of non-domestic private rented properties (including public sector landlords) to grant tenancy to new or renew or extend existing tenants if their property has an EPC rating of band F or G, unless an exemption applies or the landlord has made all the relevant energy efficiency improvements.

By 1 April 2023

Landlords must not continue to let a non-domestic property which is already let if that property has an EPC rating of band F or G – even where there has been no tenancy renewal, extension or new tenancy.

Penalties

If there is a breach of regulations, there are a number of penalties that can be imposed and the maximum penalty amounts are applied per property and per breach of regulations as under:-

Nature of default Penalty
Other
Providing false or misleading information, or failing to comply with a compliance notice Up to £5,000 Publication of non-compliance
Renting out a non-compliant property:
If with less than three months in breach (Maximum penalty of £50K) £5,000, or 10% of rateable value. Publication of non-compliance
If with more than three months in breach ((Maximum penalty of £150K) £10,000, or 20% of rateable value.
(Whichever amount is the greater)
Publication of non-compliance

The changes have the potential to massively cut energy costs for tenants. The average annual bill for someone living in a “G” rated property is £2,860. Upgrading the home to an “E” rating cuts this to £1,710, while an A or a B-rated property costs just £750 a year.

The current proposals, which are yet to be finalised by the Government just three months before their implementation, would cap the upfront cost of upgrades for buy-to-let investors at £2,500 per property. This will be payable only if no other funding is available.

If the total cost of work is more than £2,500, they can apply to the Government for an exemption. Until the cap is agreed, any landlord facing upfront costs will get an exemption.

Read about changes in smoke alarms regulations

Mixed Use Tenancy

There may be situations where there is a mix of commercial and residential property (i.e. a building with flats above a ground floor shop), owned by the same landlord.

In these cases the distinction between commercial and residential buildings should be clear, however if the property is let as a single unit the landlord will need to examine the tenancy to determine whether the property is domestic or non-domestic for the purposes of the regulations.

This form does not exist

See the Detail Law:

Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015

https://www.gov.uk/government/publications/the-private-rented-property-minimum-standard-landlord-guidance-documents/

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