Many landlords are seemingly still unaware of the new minimum energy efficiency standards (MEES) which come into force on April 1 in England and Wales. Landlords who have older properties on their portfolios are more likely to be caught out, as newer homes are generally more energy efficient. Basically, any property with an Energy Performance Certificate rating of either F or G needs to be improved to get a higher rating.
From April 1, new tenancy agreements cannot be signed on rental properties which do not have an EPC of E or above. This will include sitting tenants who are signing new agreements, as well as new tenants. More than 300,000 properties across England and Wales are likely to fall foul of the new regulations. Also from April 1, 2020, all rental properties will need to meet the minimum EPC standard of E, regardless of whether a new lease is being issued or not. As landlords face a fine of up to £4,000 for breaking this law, it is wise to check the EPC certificates for all rental properties.
There are exemptions such as listed buildings, properties let for less than six months or 99 years and above, as well as where improvements have been made but the property remains with a rating lower than E. All exemptions need to be listed on the Private Rented Sector Exemptions Register.
As well as making sure your properties comply with the new ruling, it is worth checking the building for any draughts or poor insulation, as a property with a good EPC rating is more attractive to tenants. Their energy bills are reduced in more efficient homes. Government research also shows that properties with higher EPC ratings have fewer void periods than those which have lower ratings.
If improvements are necessary to make the grade, there are sources of funding available to help landlords. If funding is not available, then the landlord can request an exemption and be put on the relevant register. As an example, improvements could be made using the Green Deal loan, where repayments are made on a Pay As You Save basis. The energy efficient improvements should mean lower energy bills. It is these savings on the bills which are used to pay back the loan. Therefore, the improvement works are carried out at no cost to the landlord, while the tenants benefit from a warmer home and lower bills.
The savings on utility bills can be significant. For example, a two-bedroom semi-detached house could see annual savings of £451 for replacing a boiler. Further funding is also available under the ECO: Help to Heat scheme, requiring energy suppliers to provide households, including those in rental properties, with improvements to make their energy more efficient. The aim is to reduce the amount of energy consumed in the UK as well as to support households who live in fuel poverty. So landlords can improve their properties and enjoy lower energy bills at no cost to themselves.
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