Nicholas Ainger, MD AgilitySurvey
Minimum Energy Efficiency Standards take effect from April 2018 and state that it will be unlawful to let a property that has an energy rating of band F or G. These properties will be deemed to be 'sub-standard'. BEIS has now released guidance for non-domestic properties but states that "separate guidance to domestic private landlords on complying with their obligations will be published in due course".
If the recently announced non-domestic regulations are an indication, there will be an exemption register for properties that cannot attain a Band E, allowing some sub-standard properties to still be let. The current domestic regulations state that a landlord only needs to utilise grants, funding and/or Green Deal finance to carry out energy saving measures that are recommended on the EPC to bring the banding up to E or above; there is no compulsion for a landlord to spend any of their own funds.
However, the government closed the Green Deal Finance Company to new business in July 2015 and we anticipate that the regulations will be amended to require landlords to spend their own hard-earned cash albeit with a monetary cap. This will not be dissimilar to the non-domestic regulations where measures must be installed at landlord cost but not for measures that have a payback period greater than 7 years.
It may be possible to enter sub-standard properties onto the exemption register for a period of 5 years, and the domestic register is anticipated to be live in October this year. The standards only apply to properties that have an existing EPC on the central register but interestingly, the non-domestic regulations have confirmed that voluntary EPCs (situations where owners/occupiers who are not legally required to have an EPC but have obtained one voluntarily) will not be required to meet the minimum standards. It is presumed the same will apply to domestic properties. The regulations will capture all properties which continue to be let from 1st April 2020, encompassing existing tenancies as well as new ones. Properties that haven’t required an EPC (because they have been continuously let to the same tenant since before 1st October 2008) will continue to be exempt until an EPC is legally required.
Rather than waiting for final clarification, our advice is to be prepared. Begin analysing your property portfolios to establish which properties could potentially fall foul of the regulations and whether improvements may be needed or an exemption applied for. Improvements could be installed now using existing funding streams which will be of benefit to landlords and tenants alike, irrespective of the forthcoming regulations.
Doing nothing is not an option.
AgilitySurvey has a wealth of experience in both assessing properties for energy efficiency and sourcing funds and grants to install energy saving measures. Prior to confirmation of regulations for the domestic sector our recommendation is to thoroughly analyse property portfolios in preparation.
AgilitySurvey can assist and if provided with a property portfolio address list we can:
- Provide a report of which properties have an existing EPC
- Record the date of the EPC and its expiry date
- State the energy rating and band
- Record the recommendations listed on the EPC and their assumed effect on the rating
- Advise on funds/grants that are available for improvements such as loft and cavity wall insulation
Once the regulations are confirmed we can advise on their impact, in terms of carrying out energy saving measures or seeking a registration on the exemptions register.