Solicitor Gemma Smith, in our Commercial Property team, asks landlords: are your properties energy efficient?
Are you aware of the impact that the Energy Efficiency Regulations (Private Rented Property) (England and Wales) 2015 (“the Regulations”) will have on you as a landlord?
To what types of property do the Regulations apply?
They apply to all types of rented property (domestic and non-domestic) which would normally require an Energy Performance Certificate (“EPC”). There are some types of let property which fall outside of the Regulations, including:
- Non-domestic leases of less than 6 months or more than 99 years
- Domestic lettings that are neither assured or regulated tenancies nor lettings by public landlords or providers of social housing
- Properties which do not have a valid EPC
What will be the effect of the Regulations?
The Regulations will require the properties to which it applies to be a minimum of an “E” efficiency rating on an EPC. Where a property falls below this threshold the landlord will be obliged to carry out necessary improvement works.
When will the Regulations take effect?
They will apply to new lettings from 1 April 2018 (including renewals and extensions) and to continuing domestic leases from 1 April 2020 and continuing non-domestic leases from 1 April 2023.
Are there any exemptions?
Yes, there are three main exemptions:
- The necessary works would devalue the property by five percent or more.
- If a landlord has carried out all possible cost-effective improvements. For improvements not to be cost-effective they must fail the ‘seven year payback’ test and the landlord must not be able to obtain green deal finance for the works.
- The landlord is unable to obtain any necessary consent for the required works from a third party.
All exemptions will need to be centrally registered on the Private Rented Sector Exemptions Register and generally will need to be re-assessed every five years.
What are the penalties for breach?
The main penalties will be financial and could be up to £5,000 for domestic properties and £150,000 for non-domestic (the actual figure being dependant on the length of breach and for the latter, rateable value).
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
