As a landlord, even if you aren’t aware of the new EPC rules, you will know that your rental property must have an up to date EPC in place before you can rent it out. These reports don’t cost a huge amount, and you can often get them organised through your lettings agent if you are using one. Once done, they last for 10 years, so as far as investments go, it’s not a bad one. Plus, as mentioned earlier, it’s absolutely essential and you can’t rent out your property without one.
You’ll receive a report
regarding your property, and that result will have two columns. The first,
ranging from A (excellent) to G (terrible) is the energy efficiency of your
property at the time of the report. The second column, which will also range
from A to G, is where your property could be if you carried out the necessary
work to make it more energy efficient.
In the past, the result of
the EPC didn’t particularly matter. It would be in place for the tenant to see,
enabling them to make an informed decision about taking on the property and
paying the heating bills – the worse the EPC the more expensive the place would
be to run. But that’s all it meant.
Now things are different because of the new EPC rules.
New EPC Rules: The Minimum Energy Efficiency Standards
In April 2019, the government introduced the Minimum Energy Efficiency Standards (MEES). When this was introduced, it meant that all rental properties had to have an EPC rating of at least E. Anything that was an F or a G could therefore not be rented out until the necessary work had been done to bring it up to at least an E (and ideally higher). Landlords who continue to rent out the property without making any changes will face a fine of up to £5,000.
Initially, these changes only affected new tenancies or tenancy renewals. However, what is important to note, and something that might catch a number of landlords out, is that as of April 2020, all existing tenancies will also be subject to the new MEES rules. So even if you’re just partway through a tenancy, as of 1st April 2020 and the new EPC rules, if the EPC on your property is less than E, that tenancy effectively becomes void. Work will need to be done in order to ensure that your EPC is at least an E. If this can’t be done (perhaps because the property can only reach a certain level of energy efficiency due to its construction) then your tenants will need to move out, and you will need to stop renting the property. It sounds harsh, but these are the new rules and they need to be abided by.
Right now, there is an exemption in place called the ‘no cost to the landlord’ exemption. This means that if the landlord cannot afford to pay for the improvements needed to upgrade the energy efficiency of their rental property and they can’t access funding (which might come from their local council or the Green Deal) they won’t have to pay to get the work done. Take note, as of 1st April 2020, that exemption will no longer be in place. All landlords will be liable for any improvements up to a cap of £3,500. Anything over that amount can be funded through other means, but the first £3,500 has to come from the landlord.