Latest change to Energy Performance Certificates implemented - Information for Landlords

On 1^st April 2020, the latest stage of the Minimum Energy Efficiency Standards was implemented, making it unlawful for landlords to continue domestic residential tenancies where the property has a rating of F or G on its Energy Performance Certificate – commonly known as an EPC.  If the energy efficiency standards are not met, landlords of residential property could face high fines.  Alexandra Savage, buy-to-let specialist Associate Solicitor within our Commercial Property team, here explains what the standards entail, why they were introduced and the penalties landlords could face if they do not comply.

Energy Performance Certificate regulation changes

Two years ago, the first stage of implementation introduced the requirement for an E rating or above on EPCs for all new tenancies granted.  This is now extended to all existing domestic tenancies and in 2023 it will be extended to all commercial tenancies.  

Where landlords continue to let domestic property which fails to meet a minimum E rating, enforcement action and fines of up to £5,000 could follow.  While there has been little enforcement since 2018, that has been attributed to the difficulty of identifying whether property was subject to a ‘new’ or ‘existing’ tenancy, but those in the industry say it is likely that enforcement will be tackled now that all property let under a residential tenancy must comply.  

Alexandra explains, “Despite our current situation regarding coronavirus, all domestic landlords should not use this as a reason to delay checking their property portfolios and undertaking any work that is needed to increase the EPC rating or to register an exemption, where it is safe and possible to do so in line with Government restrictions. There is a variety of funding support available for landlords, and a cap on how much has to be spent, so we would recommend landlords check the Government’s information and guidance on how to meet the regulations.”

Are there any exemptions to the EPC standards?

Exemptions may be provided in the following circumstances:

• where a landlord has undertaken measures recommended in the EPC report up to a cap of £3,500 including VAT but the property still does not meet the E rating.
• where any recommended upgrade option would exceed £3,500.  

Any exemption that is granted will last for five years after which the property must once more be upgraded.

“Properties listed for historic purposes are generally thought to be exempt, although it’s not entirely clear from the EU Regulations and the Government’s guidance,” continues Alexandra.  “These say that energy performance compliance may not be required if the necessary works would unacceptably alter the character or appearance of a building, but do not provide an automatic exemption.  Owners are well advised to get an EPC and then ask their local conservation officer to confirm where they stand if the property does not meet the new requirements.”

The Regulations also allow the tenant to undertake energy improvements if the landlord gives their consent, even where there are restrictions on making improvements in the lease.  If the tenant applies for consent the landlord may only refuse on reasonable grounds. 

If you are a landlord and have questions regarding your property meeting the new EPC standards, or have concerns about your buy-to-let situation in light of the current coronavirus pandemic, you can contact Alexandra or a member of the team on 023 9277 6561 or email alexandrasavage@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.