Are Landlords at risk of being caught out by energy performance laws?
Landlords have long been aware that in order to market a property for sale or to let, they must supply an Energy Performance Certificate (“EPC”) to any perspective Tenant or Buyer.
However, the Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2015 (SI 2015/965) (the “MEES”) now impose much stricter obligations on Landlords of both commercial and residential properties.
The requirements have been introduced in stages and this can be confusing for Landlords, particularly as those requirements become stricter over time. For example, if the energy efficiency rating of a property falls below a minimum rating of “E” then:
• From 01 April 2018, Landlords can no longer grant new leases of that Property
• From the 1st of April 2020 Landlords will not be permitted to continue current lettings of residential properties even if that lease is mid-term
• From the 1st of April 2023 Landlords will not be permitted to continue current lettings of non-residential properties even if that lease is mid-term
What we have found is many Landlords are not aware of the changing requirements which means they’re not thinking about the steps they may need to take to ensure they can continue letting their properties. Failing to comply with the energy efficiency requirements could have several adverse effects on a Landlord including:
• Fines up to a maximum amount of £150,000 depending on the rateable value of the Property
• A property losing value because the landlord will either no longer be able to let it or will have to do substantial work on it improve the property’s energy efficacy rating
• As tenants become more aware of the obligations on Landlords regarding energy efficiency of their buildings, landlords could find themselves facing tenants demanding a rent reduction
If you are a Landlord, we’d suggest you consider taking the following steps:
• Ensure you obtain an EPC for each property you intend to let if it’s a legal requirement
• Obtain specialist advice on your obligations regarding energy efficiency and the provision of an EPC on a new letting or a renewed letting of a building or part of it
• Obtain specialist advice on whether there are improvements you will need to make to any of your properties to increase its energy efficiency
• Get advice on the availability of any exemptions from the MEES
• Make sure your leases include provisions that comply with your legal obligations
• Consider including provisions in your leases to ensure you do not have to bear the full cost of any improvements works or the cost of complying with energy efficiency requirements
• When purchasing an investment property, make sure you find out about that property’s current energy efficiency rating
If you are a Landlord and you would like to find out more about MEES or ask any additional questions regarding Energy Performance Certificates please email Hollie.Hemmens@keebles.com or call Hollie on 0114 290 6337.