Investigating the EPC rating for a rental property is a generally simple process that can be completed by any landlord or agent online. Providing an Energy Performance Assessment was completed on the property within the last decade, the information is ready to be viewed on the MHCLG website (https://www.gov.uk/government/organisations/ministry-of-housing-communities-and-local-government) EPC Assessments last for a ten year period, and generally cost between £70 and £100.
With the upcoming introduction of the MEES (Minimum Energy Efficiency Standard) regulations next month, landlords themselves and letting agents must ensure that their properties reach a minimum energy efficiency standard before being marketed to let. The minimum standard that a property should meet is an “E” rating.
The new regulations come into force on 1st April 2018, and will mean that letting agents and residential landlords are obliged to confirm that their rental properties satisfy the required rating standard before a replacement or new tenancy is granted. If this standard is not met, landlords and letting agents face heavy fines.
Letting a property on a renewal or new tenancy for any length of time less than three months will result in a violation of the MEES Regulations, resulting in a fine of the equivalent of 10% of the property’s value. There is a minimum penalty applicable of £5,000, and a maximum fine of £50,000.
After the three month point, the fine rises to a hefty 20% of the value of the property, with a minimum fine of £10,000, and a maximum penalty of £150,000.
In another two years, even in the case of existing tenancies,there will be even graver consequences, and it will become illegal for landlords to continue renting properties if they have not attended to the matter of energy efficiency and made sure the property conforms to the minimum standard of an “E” EPC rating.
Another crucial reason to ensure that your property meets the minimum standards is for mortgage renewals. As part of the new mortgage regulations, the underwriting requirements for mortgage renewals or new buy-to-let mortgage contracts require proof of EPC ratings, for contracts issued in accordance with the Bank of England’s Prudential Regulation Authority.
The mortgage lenders that grant new finance deals will generally require that properties be revalued. If one or more properties in a landlord’s rental portfolio fail to meet the minimum MEES standards after 1st April 2018, the value of the property could be affected, and it could possibly result in the refusal of mortgage applications.
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