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13 Jul 2017

Landlords risk £5,000 fines under new energy rules

From April 2018, rental properties must meet new minimum EPC ratings

More than 300,000 landlords could be slapped withfines ofup to £5,000 if they don't improve the energy efficiency of their rental homes,under new rules coming into force next year.

Earlier this week, the department for Business, Energy and Industrial Strategy confirmed that planned changes toenergy standards in the rental sector willbe rolled out next April. The new scheme will require rental properties to achieve a minimum Energy Performance Certificate rating of E.

The clock is now ticking for the hundreds of thousands of landlords whose properties currently fall short of the required standard - and some may struggle tobring their properties up to scratch in time.

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).

In theory, a home with a higher rating should have lower energy bills, making it more attractive to buyers or tenants.

EPCs last for 10 years,and can be be performed by any accredited assessor. But while your letting agent might offer toinclude the cost of an EPC in your sale or rental contract, it can pay to shop around for the best deal.

Energy efficiency:what are the new rules?

FromApril next year, all rented homes in England and Wales must have a minimum EPC rating of E.

Initially, this will apply only to new tenancies and renewals, before beingextended 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 - and if you violate these rules, you could face fines ofup to £5,000.

How will the new regulations work?

The full details of the new scheme won't be published until October, so it remains to be seen how the rules will be enforced.

As it stands, the government has confirmed that a breach of the regulations will not invalidate your tenancy agreement. But you will face cumulative fines up to a maximum of £5,000, as follows:

  • Providing false information to the exemptions register - £1,000
  • Failing to adhere to a compliance notice from your local authority - £2,000
  • Renting out a property which doesn't meet the minimum standards - £2,000 (for less than three months) or £4,000 (for more than three months).

Are there any exemptions to the rules?

Currently, around 330,000 rented homes have EPC ratings of F or G, with the majority of these being older properties.

While listed homes will be exempt, there has been no indication so far that owners of non-listed homes will be givenany leeway - even if the property's age makes it difficult to insulate.

David Smith of the Residential Landlords Association told Which?: 'Non-listed properties that do not meet the required efficiency standards will simply not be able to be rented out legally.'

'While listed buildings will be exempt from meeting the regulations, it is highly unlikely that properties that are Victorian or Edwardian cannot be improved simply because of their age, and age alone will not be a basis for exemption.'

He warned that bringing properties up to the E standard may be an expensive burden for some landlords.

'We have been concerned at the substantial costs some landlords might have to incur to bring their properties to the required standard, when two thirds of them are only basic rate income tax payers.'

How to improve the energy efficiency of your home

If you're looking to improve the energy efficiency of your property, we've got a range of advice to help you on your way, from shorter-term cost-saving measures to larger projects.