Landlords Be Aware - Energy Efficiency Regulations Imminent

From 1 April 2018, The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 will make it unlawful to issue a new lease to a new or existing tenant unless there is an Energy Performance Certificate (EPC) in place with a rating of E or above. Landlords need to be aware of imminent changes affecting the letting of both residential and commercial properties.

The regulations will not only affect the ability to let property but by association capital values as well. We are already seeing changes in the market because of these new Regulations.  Financiers are limiting the loans offered on properties with lower EPC grades, and tenants are also demanding improvements before taking properties.  In addition, as Valuers, the RICS has instructed us to take the EPC status into account when valuing property. 

There are some exemptions to the regulations:

• Listed and unheated buildings which do not require an EPC
• Leases for less than 6 months (unless there is an automatic right of renewal) or more than 99 years
• If energy efficiency works would devalue the building by more than 5%
• If all the recommended energy efficiency improvements that have a payback period of less than seven years have already been completed
• Where the improvements cannot pay for themselves in savings over the next 25 years

Landlords are advised to review the ratings in their investment portfolio well in advance of the changes and put a plan of action in place.  An EPC is accompanied by a recommendation report which details improvements that can be made to a building. You can check EPC ratings for non-domestic property at www.ndepcregister.com or contact a suitably qualified EPC assessor for further advice.    Properties which have not changed hands in the last 7 years may not yet have had an EPC assessment undertaken.