The updated laws for new lettings and renewals of tenancies will begin on April 1, and for all existing tenancies on 1st April 2020.
Landlords will face a fine of £4,000 if their rented property breaches the minimum E rating, unless it meets certain exemption criteria.
Under the EU’s Energy Performance of Buildings Directory (2002), all buildings that are leased or sold require an Energy Performance Certificate.
This measures the energy efficiency of the building, which includes heating, lighting, insulation, air quality and carbon dioxide emissions. All are assessed and compared to a set benchmark.
The certificate, which lasts for 10 years, is a legal requirement for both commercial and residential buildings, and is the responsibility of the person selling or renting a building to have a valid EPC.
How it could affect property owners?
• If a property is currently rated F or below, the owner will be unable to sell it until the energy efficiency is upgraded.
• Delays in lease renewals may arise because the tenant would require the EPC to proceed.
• Rent reviews for commercial leases in particular will be affected.
• Property valuations may decrease with banks and other financial institutions refusing to advance monies on properties less than E rating.
What are the exceptions?
Landlords can let a building which doesn’t meet the minimum standard if any of the exemptions below apply.
• An independent assessor concludes that every possible energy efficiency improvement has been implemented to the property or the improvements that could be made but have not been made would not pay for themselves through energy savings within seven years.
• An independent surveyor deems any relevant energy efficiency improvements made to the property were likely to reduce its market value by more than five per cent.
• Where consent from persons including a tenant, a superior landlord or planning authorities has been refused or has been given with conditions with which the landlord cannot reasonably comply.
All exemptions must be registered on the central government PRS Exemptions Register.