ENERGY PERFORMANCE CERTIFICATES (EPC)
For several years it has been a legal requirement that anyone selling a property or renting a property must have an EPC. Most people have taken very little interest in the result of the EPC. However, it now appears that the Government will be using the EPC’s in a variety of ways. Therefore, the result of the EPC may become very important.
For example no property that is rated “F” or “G” will be eligible for a Green Deal Loan (see below).
From April, 2018 it will not be possible to rent out a property that is rated “F” or “G”. It is possible that some exceptions may be made to this rule; however, this information is not yet available.
We are expecting to see more use of EPC’s in the future..
Solar panels are appearing on the roofs of many houses and on business premises. House and Business owners can benefit from lower electricity bills and sell their unused electricity to the energy supplier. But will there be any problems that will affect the sale of property at a later date?
Owners must make sure these points are dealt with properly:
• Planning permission – this will be required where panels are installed on listed buildings or for houses that are in conservation areas. This includes National Parks or World Heritage sites if the panels are visible from a highway or watercourse. In addition there are a large number of houses built on new developments within the last 20 years where the Local Authority made it a requirement for planning permission to be obtained for any additional work carried out at the property and this would include solar panels. Many owners may even be unaware that their house has this requirement.
• Building regulation consent – this will be required, unless you produce certificates under Parts A, B, C and P when you sell the house.
• If your property contains clauses stating you need to obtain consent to any alterations you will need to get permission to install the panels. If you own a leasehold house or flat you will need consent from the Landlord.
• You need to tell your insurance company and if you have a mortgage, your lender.
• You must make sure your estate agent mentions the panels in the particulars and your solicitor includes a clause in the contract.
Panels can either be bought outright or on a lease arrangement. Provided you have covered the points above, selling a property with panels that have been bought outright should not be too difficult. If, however, you have entered or are thinking about entering into a lease arrangement the situation is very different and you may have problems selling the house or premises in the future.
The solar panel lease is a business lease. Most companies that provide residential mortgages will refuse to grant a mortgage where there is a solar panel lease arrangement. The few lenders who are prepared to lend will be looking for the lease to have a “break clause”. This means it is possible to bring the lease to an end before the term of the lease ends. Also required will be provisions which mean that at the end of the lease there can be no automatic further lease arrangement. This is known as a “contracted out” lease. Because the leases are commercial in nature it is very important to obtain advice from a Solicitor who has experience of commercial leases and understands what is required by companies that lend money on residential properties before you sign a lease.
THE GREEN DEAL
The Government want people to increase the energy efficiency of their houses and have made available loans to install energy efficient equipment. This loan is paid back with interest over a long period (usually 25 years). Therefore, the energy bills are lower but there will be an extra amount added to them to repay the loan.
To prevent the total of your energy bills ending up higher than they would have been without the equipment being installed, there is a Golden Rule that limits the amount of Green Deal finance that can be offered. Customers will have a “reasonable expectation” that their bills will not be higher.
Before you can apply to have the energy equipment fitted you need to have an EPC (Energy Performance Certificate) for the property. No loans are available on properties rated F or G.
However, please note that you will have to repay the loan if you:
• sell the property and do not tell the buyer that there is a clause in the contract
• demolish the property
• change its use or convert it (e.g. to bedsits)
• fail to get planning permission or building regulations approval where it is required – and in the majority of cases building regulations approval will definitely be required
If you are selling you may find the buyer insists on the loan being repaid – leaving you with the cost and them benefitting from the lower bills.
The consent of the lender will be required – but most lenders are in favour and are likely to give their consent.
If the property is leasehold and the landlord is going to carry out the work the tenants consent is required. If it is a tenant who is carrying out the work the landlord’s consent is required.
As from the 1st January, 2012 all septic tanks in Wales must be registered with the Environment Agency unless the property has a discharge consent.
It was intended that similar provisions would apply in England; however, at the moment full requirements are not in force. Currently any septic tank which has a discharge of more than 2m3 a day or where the discharge is within a zone 1 Groundwater Protection Zone must be registered. However it is possible to voluntarily register and our recommendation would be that the Seller should register their septic tank at the property before contracts are exchanged.
Japanese knotweed is a contaminated substance and it is illegal to cause it to be propagated under the Wildlife and Countryside Act 1981. There are a growing number of lenders who are refusing to grant mortgages on properties where there is knotweed or where knotweed is found on an adjoining property. It is not reasonable to expect an owner to know that they have knotweed and therefore this is something which your Surveyor should check.
FLOOD RISK INSURANCE
Flood risk insurance is currently provided for properties under an agreement between The Association of British Insurers and the Government. The agreement is due to come to an end in July 2013. It is not certain what agreement, if any, will be reached after that date.
One in six properties (commercial and residential) in the United Kingdom is estimated by the Environment Agency to be at risk of flooding and 500,000 of these at significant risk. It is estimated that the figure will rise by 2035 to 835,000 properties.
We carry out an Environmental Search as part of the conveyancing process and will highlight any reference to the property being affected by flooding. We may recommend a specialist flood report. You will need to disclose the content of the Environmental Search and any flood report to your Insurers and make sure that they are prepared to provide you with full cover before you exchange contracts.