Property: Minimum Energy Efficiency Standards
It’s just over a year before new regulations covering energy efficiency of properties come into force. The minimum EPC rating – Level E – will apply to all new leases from 1 April 2018 and all leases from April 2023. In this feature, we look at the key facts owner managers or landlords need to know and what they should do to comply. Moreover, we outline the penalties that could result from not being on top of the situation.
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Minimum Energy Efficiency Standards
In April 2018 new regulations affecting private rented property will come into force and will require that most properties which are to be rented to tenants must have an Energy Performance Certificate (EPC) rating of Level E or above. The move to require buildings to be more energy-efficient has formed part of government policy since the 1990s but the changes were encouraged more by incentives than sanctions until now. The latest regulations show the previous and current governments are now taking to use of the stick, as well as offering the carrot, in order to bring greenhouse gas emissions down and to improve the standard of private rented housing stock.
The requirement that properties have an EPC of level E and above has some notable exceptions. In terms of commercial buildings, EPC ratings of level E and above won’t be required for:
- buildings used as places of worship and for religious activities;
- temporary buildings with a planned time of use of two years or less,
- industrial sites,
- residential agricultural buildings with low energy demand and residential agricultural buildings which are in use by a sector covered by a national sectoral agreement on energy performance
- stand-alone buildings with a total useful floor area of less than 50m2
- listed buildings and monuments or those which are part of a protected environment (e.g. Word Heritage Site) if obtaining a Level E rating would unacceptably alter their character or appearance
Listed Building Owners Beware!
Some landlords seem to have a belief that simply owning a listed building means that they don’t need an EPC for new lettings. This isn’t necessarily the case – the regulations and government’s enforcement policy in this regard aren’t entirely clear. The regulations state that the requirement to provide an EPC (and therefore to supply one with a rating level of E or above) still applies if achieving a Level E would not ‘unacceptably alter the character or appearance of the property’. So if it’s simply a case of putting in some loft insulation to get a Level E EPC rating, then, arguably, the landlord needs to do the work and to get the EPC certificate as well.
As a result all landlords who own listed buildings are well advised to discuss this issue with their local council’s building conservation officer but will also need to have some idea of what the building’s likely current EPC rating is and what works would be needed to improve it (if Level F or below). A conversation with a friendly EPC assessor may also be in order.
Non-Standard Construction Buildings
There is little wiggle-room for Landlords to claim an exemption from the regulations and this can raise issues for people with non-standard construction buildings. There is no ‘set’ definition of standard construction but generally a non-standard construction building is one which is not built of brick or stone and which is not roofed by slate or tiles.
Since the definition is so wide, it catches a large number of properties (particularly given the increase in people using non-standard materials such as straw bales and shipping containers as a response to high commodity prices, low site supply and the need for quick-builds and temporary buildings).
Those landlords who have a building of non-standard construction would be wise to start looking at getting an EPC now, rather than later, as getting a satisfactory EPC rating may be tricky and could result in the need to make modifications. The reason for this is that the EPC ratings surveyors have to apply a set of standards and questions and cannot deviate from them or take into account other factors. Elements of the property are checked (such as whether there are double glazed windows, roof insulation etc.) and the data loaded into computer programmes written for the purpose. An EPC rating is then generated. The EPC surveyor has little or no discretion to take into account energy saving features, design features or construction methods which do not appear in the list required. As a result highly efficient buildings have been known to emerge from the process with a very poor ratings (e.g. Level G) prompting the owners then to make modifications such as the installation of heating (where it was not previously required) and halogen lighting in order to achieve a better rating.
For landlord who think that they may simply market their property and worry about an EPC later, the advice is simple: ‘Don’t’ . It’s an offence to market a property without an EPC (or at least without one having been commissioned). Agents are highly unlikely to be willing to market your property unless you have a satisfactory EPC or have commissioned one and there is a fixed penalty fine of £200 for failing to provide an EPC for each advertisement run. Trading standards team may also take further action to prevent the marketing of the property until a satisfactory EPC certificate has been produced.
If you wish to discuss any of the issues raised in this article please contact Rebecca Dixon, Associate, on 0117 403 3587 or email@example.com or Jason Lee, author of the article.
The information provided in this article is for general information purposes only and does not constitute legal or other professional advice and cannot be relied upon as such. Any law quoted in this article is correct as at 17 January 2017. Appropriate legal advice should be sought for specific circumstances before any action is taken. Copyright © Murrell Associates Limited, January 2017.