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New Rules For Energy Efficiency Standards

Reasons to choose Wilson Browne

Under the Energy Act 2011 new regulations have been introduced

These affect the letting of properties with an Energy Performance Certificate (EPC) rating below E (so those properties currently rated F or G).

The changes

  • From 1 April 2018 it will be unlawful to grant, extend or renew a lease of a property with an EPC rating of F or G;
  • From 1 April 2023 it will be unlawful to continue letting a property with and EPC rating of F or G.

There are exclusions

  • Leases of 6 months or less (but only where the tenant does not occupy for 12 months or more);
  • Leases of 99 years or more;
  • Where a building is already exempt from obtaining an EPC (e.g. a listed building);
  • Any social housing

There are exemptions:

These are valid for only 5 years after which the landlord must carry out the works or reapply. To be exempt the landlord must register the exemption on the PRS Exemptions Register:-

  • Where all relevant energy efficiency improvements have been carried out, or where none exist. The test is whether the expected energy bill savings exceed or equal the cost of the works;
  • In the case of domestic properties only, where all relevant energy efficiency improvements have been carried out which can be wholly financed by other means (such as Green Deal or Energy Saving Trust schemes);
  • Where the landlord is itself a tenant and has been unable to obtain the consent of other relevant parties (e.g. the superior landlord, the local authority) BUT the exemption will only apply to that part of the works which requires the superior landlord’s consent – all other works must be carried out;
  • If the improvements would result in a 5% or greater decrease in the market value of the property;
  • Wall insulation works where the works would adversely affect the structure of the building;
  • There is a 6 month exemption period for a purchaser of a non compliant lease (unless the seller had already had that period.

There are also temporary exemptions

  • Where a lease is granted out of a contractual obligation (e.g. an option agreement);
  • Where a former tenant/guarantor obtains a lease through non payment of rent by the current tenant;
  • On a surrender and re-grant;
  • Renewals under the Landlord and Tenant Act 1954.

What are the penalties?

  • Up to £5,000.00 for domestic properties;
  • Up to £150,000.00 for non domestic properties.

If you need any Landlord advice contact our Specialist Team