Insights

Will landlords be paying their way on energy efficiency improvements to residential properties?

7/11/2018

Under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES Regulations), since 1 April 2018, landlords are prohibited from granting a new tenancy of domestic private rented property which is sub-standard.  Sub-standard means that the residential property has a valid EPC rating of less then "E" i.e. "F" or "G" ratings.  A landlord can grant a tenancy of a sub-standard residential property if it carries out relevant energy efficiency improvements.  The energy efficiency improvements have to be financed at no cost to the landlord but there has been a government consultation on removing this requirement and replacing it with a funding contribution by the landlord with a cap indicated at £2,500. The majority of responses to the government consultation were in favour of the amendment and now the government has announced its intention to make the amendment and introduce a capped landlord contribution which will be at £3,500.  As the article in The Guardian of 5 November 2918 reports, this is less than the £5,000 cap recommended by the Heating and Hotwater Industry Council and the lower cap will limit the number of tenanted homes where landlords would have to self-fund energy efficiency improvements.  

Letting of residential property is the subject of increasing regulation and control against the background of the housing shortage and use of the private rental sector.  Landlords are advised to check that they are fully aware of legislative changes to ensure that they are letting lawfully and are not exposed to enforcement action.

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More landlords will be forced to upgrade the energy efficiency of the coldest homes in England and Wales, under a partial climbdown by the government. Owners of the draughtiest homes – those rated in the worst energy bands, F and G – have been been required since April to upgrade them to band E or be barred from agreeing new tenancies. The government previously proposed that landlords who faced costs exceeding £2,500 for putting in new insulation and other measures would be exempt from making the upgrades. That was half the ceiling previously expected, letting many landlords off the hook and leaving tenants facing higher energy bills. But on Monday the government announced it is lifting the cap to £3,500, meaning fewer owners would be exempt.

https://www.theguardian.com/money/2018/nov/05/landlords-energy-efficiency-tenants-homes