What do landlords of residential property need to know, and what should they do to prepare?
We have all heard of the government’s Net Zero by 2050 strategy, and one of the policies proposed by the government in order to achieve this, is to improve the energy efficiency of homes - with a particular focus on rented, residential property.
One of the changes proposed to assist in achieving the government’s carbon neutrality goals, is to raise the minimum energy efficiency standard for rented, residential property.
Currently, landlords can only let residential property to tenants if the property has an energy efficiency rating of ‘E’ or above. Landlords are required to serve a copy of the Energy Performance Certificate (EPC) showing this, on their tenant at the commencement of the tenancy.
The EPC grades a property’s energy efficiency on a scale of A to G, (A being the highest), after the building and its age, roof, windows, walls and insulation, boilers / heating system, lighting, fireplaces and renewable energy devices such as solar panels, have been assessed. The EPC will also suggest how the rating could be improved and overall it provides an indication of the estimated energy costs for the property.
The new EPC regulations though will require rented properties to have an EPC rating of ‘C’ or above, rather than ‘E’ or above. It is also proposed that the penalty for landlord’s not having a valid EPC will be raised to £30,000 by 2025.
So, by 2025, a property will need an EPC rating of ‘C’ or above in order for a landlord to grant a new residential tenancy, and the requirement for an EPC rating of ‘C’ or above will apply to existing tenancies by 2028. This is the case unless an exemption applies. Landlords who are currently sitting calmly knowing that their rented properties have an energy efficiency rating of ‘E’ or above, which is all that is currently required, need to be alert to these proposed changes, and what that might mean for them.
There are instances where a property is exempt from the minimum energy efficient standards and EPC requirements, such as with listed or protected buildings, when a ‘high cost’ would be required for improvements, or where all the relevant energy efficiency improvements for the property have been made. Exemptions are not straightforward though and more information can be found here.
Overall, the changes to energy efficiency requirements for rented, residential property are made with the intention of making homes more energy and cost efficient, reducing carbon emissions, and in order to assist in reaching the government’s net-zero by 2050 target. That said, this will come at a cost to residential landlords, and that cost could be significant when considering what improvements might be needed in order to improve the energy efficiency rating for just one property – let alone if a landlord has a whole property portfolio. To prepare, landlords should monitor developments in this area, and start budgeting and planning in order to comply, or be ready to apply for an exemption if applicable.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.