The government has a wonderful habit of giving landlords surprisingly long notice of intentions to change laws and then, because the period is so long, landlords often due to their “hectic and exciting” lifestyles tend to forget and can be caught out with substantial consequences!
There are currently over 50 acts of parliament and over 70 further regulations, making property letting one of the most regulated sectors after finance in the UK today, making it incredibly difficult to keep up with the changes. Sadly most of the recent legislation includes draconian fines (usually in the £ thousands)! So it is really worthwhile dealing with people (and companies), who know and understand UK property law.
The change of law I am referring to in this particular blog is part of the green deal initiative. Initially conceived in 2010 and enacted into law in 2012. This legislation was driven by the Climate Act 2008 which legislated for a reduction in the UK carbon emissions of 34% by 2020 and 80% by 2050. It set legally binding carbon budgets for the next 12 years (up till 2020), across all sectors of the UK economy including our homes, rental properties, communities and places of work.
From 2016 new rights came in for tenants to request additions to the property to reduce costs of heating (additional insulation, new energy efficient boilers etc.). However the really big part of this act of parliament will come into force in just over one year and this is what I really want to draw your attention to now, as you should ignore it at your peril !
As from the 1st April 2018 there will be a requirement for any properties rented out in the private rented sector to normally have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. Therefore, it will be unlawful to either market or rent a property which breaches the requirement for a minimum E rating (unless there is an applicable exemption and I am informed there are only three, which have to meet very exacting and specific criteria). A civil penalty of up to £4,000 will be imposed for any breaches prosecuted. This guidance (see link below), summarises the regulations. There are separate regulations effective from 1st April 2016 under which a tenant can apply for consent to carry out energy efficiency improvements in private rented properties. (N.B. just copy and paste into your browser for link directly from the RLA website; https://www.rla.org.uk/landlord/guides/requesting-energy-efficiency-improvements.shtml).
So basically I would firstly advise you to check that you have a current EPC. It became law in 2007 and they are valid for ten years so you may well be ready to renew, as it is illegal to market ANY property (unless there are legal exemptions), for either sale or rental, without a current EPC.
Next I would sugest that you check your current EPCs to make sure that it is either E or above, as from April 2018 if your property comes up for rent and your EPC is F or a G, basically you can’t rent it!
If you have tenants currently in tenancy, then you do have a further two years to make the necessary changes (as long as they do not leave and you cannot renew either during this period it is periodic status only), but even if your tenants are still there in April 2020 and you haven’t done the improvements then your tenancy ceases to be legal and you can be fined up to £4000 plus any civil actions for compensations from other interested parties (i.e. tenants, guarantors, relevant persons etc.).
I still believe it is worth noting that although the energy grants are not what they used to be, there is still money available and we are currently working with suppliers and providers to try and get our clients savings on any essential work required. Funding is currently based on carbon footprints and again the way the government determine grants will be changing once more in April 2017, so again I advise you to act swiftly if you are to achieve any potential savings on what could well be essential work to allow you to continue renting your property.
If you have any questions on this blog or any other letting or management issues you would like to discuss, then you are welcome to call me at either our Durham office (0191 212 6970), where I am normally located, or our Newcastle head office (0191 212 2020) and just ask for me.