From the 1st April 2018 there will be a requirement for any properties rented out in the private rented sector to have a minimum energy performance rating of E (the energy rating will be found on an Energy Performance Certificate (“EPC”). The new requirement will be imposed under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (“the regulations”).
The regulations will apply to tenancies granted on and after 1st April 2018 (including renewals) and the regulation will apply to all existing tenancies from 1st April 2020.
The new regulations prohibit letting a property which falls below the new minimum efficiency rating unless the landlord is exempt. A civil penalty of up to £5,000 will be imposed for letting a property below the EPC rating E.
Landlords should prepare now to ensure they will be compliant with the regulation. Check the rating of a property on the EPC register here.
We have broken down the exemptions the regulations permit into three categories:
- Consent exemption
- Devaluation exemption
- Temporary Exemption in Certain Circumstances
There will be a PRS Exemption Register, where the landlord wishes to rely on an exemption from having to increase the energy performance of a property to at least the rating of E the landlord may only rely on the exemption if the information is registered on the PRS Exemption Register.
The consent exemption applies where the tenant refusing to:
- consent to any relevant energy efficiency improvement being made,
- to give any confirmation which must be obtained from the tenant by virtue of regulation 36 of the Framework Regulations before any green deal plan with which the landlord proposed to fund the making of the relevant energy efficiency improvement could be entered into,
Where despite reasonable efforts by the landlord to obtain third party consent, that consent having been—
- refused, or
- granted subject to a condition with which the landlord cannot reasonably comply.
The devaluation exemption applies where the landlord has not made a relevant energy efficiency improvement because the landlord has obtained a report prepared by an independent surveyor which states that making that relevant energy efficiency improvement would result in a reduction of more than 5% in the market value of the property, or of the building of which it forms part.
Temporary Exemption in Certain Circumstances
The temporary exemption is an exemption for 6 months from the date on which the landlord becomes or continues to be the landlord in the following circumstances:
- the grant of a lease pursuant to a contractual obligation,
- a tenant’s insolvency, by virtue of the landlord having been the tenant’s guarantor,
- the landlord having been a guarantor, or a former tenant, who has exercised the right to obtain an overriding lease of a property pursuant to section 19 of the Landlord and Tenant (Covenants) Act 1995,
- the deemed creation of a new lease by operation of law,
- the grant of a new lease pursuant to the provisions of Part 2 of the Landlord and Tenant Act 1954,
- the grant of a lease by order of the court not falling within sub-paragraph (e).
- the landlord became the landlord of the domestic PR property, or non-domestic PR property (as the case may be), on purchasing an interest in that property and on the date of the purchase, the property was let on an existing tenancy.
Exemptions wished to be relied on by the landlord can only be relied on where the information is registered on the PRS Exemption Register.
Penalties and Enforcement
Where a landlord has failed to comply with the regulations and an exemption does not apply or has not been registered on the PRS Exemption Register the landlord may face a penalty of up to £5,000 and regulation 39 of the Regulation currently provides that any penalty imposed on a landlord is to be published on the PRS Exemption Register detailing the breach that was made, the address of the let property the breach related to and the amount of the penalty given to the landlord, where the landlord is not an individual (such as a limited company) the landlords name will also be published.
A landlord can appeal a penalty notice served in relation to a breach of the regulations the typical time limit to submit an appeal is 21 days from the date the penalty notice is served upon the landlord. Any appeal would need to be made to the First-tier Tribunal. The grounds of appeal which may be relied on are:
(a) the issue of the penalty notice was based on an error of fact,
(b) the issue of the penalty notice was based on an error of law,
(c) the penalty notice does not comply with a requirement imposed by these Regulations, or
(d) in the circumstances of the case it was inappropriate for the penalty notice to be served on the landlord.
Tenants Right to Request Consent to Energy Efficiency Improvements
From 1 April 2016 tenants have been able to request consent from their landlords to carry out energy efficiency improvements to privately rented properties. The landlords are not permitted to unreasonably refuse consent. However, it is the responsibility of the tenants to ensure that the works are funded and the intention is that no upfront costs should fall on the landlord, unless the landlord agrees to contribute.
Where a tenant makes a request for such improvements the tenant must provide specific information to the landlord set out in regulation 8 of the regulations. There are also circumstances in which a request for improvements may not be made by the tenant such as where the tenant has been served with a section 8 or 21 notice under the Housing Act 1988 or a Notice to Quit under section 5 of the Protection from Eviction Act 1977 and possession proceedings may be made in reliance of such notice.
This article is a brief summary of the regulations enabling landlords to prepare their properties for minimum energy efficiency ratings. For more information or advise contact Landlords Advice UK on 0203 903 2000