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Buy-to-let landlords face fines and bans under new energy rules

300,000 properties could be affected by new energy efficiency standards

Buy-to-let landlords face fines and bans under new energy rules

Landlords will be barred from renting out properties that fail to meet minimum energy efficiency criteria, under new rules coming into force next week.

The government’s new Minimum Energy Efficiency Standards apply from 1 April, and could affect up to 300,000 properties in the private rented sector.

With a little over a week to go until the changes, there are signs that both landlords and specialist mortgage lenders are still trying to get to grips with the new rules.

Energy Efficiency Standards: what you need to know

From 1 April, rented homes in England and Wales must have a minimum Energy Performance Certificate (EPC) rating of E.

Initially, this will apply only to new tenancies and renewals, before being extended to all existing tenancies by 2020.

That means that landlords will not legally be able to rent out homes with an EPC rating of F or G.

Landlords who fail to adhere to the regulations could face cumulative fines of up to £5,000 – although some exemptions may be in place for buildings of architectural significance. You can check the full set of regulations for more information.

How many landlords will the changes affect?

The Association of Residential Letting Agents claims that the number of properties rated F or G has dropped significantly in the past few years, as landlords have responded to calls for better insulated homes.

Nonetheless, the industry body estimates that around 300,000 homes with F or G ratings could be affected by the new rules.

Yet many landlords appear to be in the dark about the upcoming changes. A survey from the specialist insurance provider Just Landlords found that only 4% of landlords it surveyed were aware of the new regulations.

These findings support research conducted by the energy company Eon last year, which discovered that one in four landlords don’t even know their property’s EPC rating.

What is an energy performance certificate?

All properties listed for sale or rent in the UK must have a valid Energy Performance Certificate (EPC), which provides a rating of how efficiently your home uses energy.

The EPC ratings range from Grade A (most efficient), to Grade G (least efficient), with a home that has a better rating in theory benefiting from lower energy bills.

EPCs last for 10 years, and can be be performed by any accredited assessor.

Will EPC changes affect mortgage applications?

Some brokers have expressed concern that the new regulations will stall mortgage approvals by adding additional paperwork.

Finance might be harder to come by for properties with poor energy efficiency ratings. A handful of lenders, including Coventry and OneSavings Bank, have already made changes to their lending criteria.

Coventry says it will no longer lend on properties with EPC ratings below E (unless they have a valid exemption), while OneSavings says it will require solicitors to advise borrowers of the regulations.

Improving your EPC rating

If you need to make significant changes to improve the energy efficiency of your property, you might be able to access a Green Deal Loan, subject to an assessment of your home.

The Green Deal isn’t right for everyone, however, so make sure you do your research into which improvements are eligible and how the finance plans work before jumping in.

If you’re interested in learning the basics about improving energy efficiency, you can check out the following Which? guides:

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