Minimum Energy Efficiency Standards – EPC’s
From 1st April 2018 it is now illegal to let out a property if its Energy Performance Certificate (EPC) band is F or G. It is a legal requirement for the construction, sale or lease to a new tenant of most buildings, domestic and non-domestic. Miiler & Miller, Land Agents explains:
The requirement to have an EPC is triggered by the action of letting or selling a property. If a property has a valid EPC when it is let, but that EPC expires during the term of the tenancy, there is no requirement to obtain a new EPC until the tenancy ends and the property is re-let (either to the same tenant or to a new tenant).
There are some exclusions from the need to have an EPC namely (England & Wales):
(a) buildings officially protected as part of a designated environment or because of their special architectural or historical merit, in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance;
(b) buildings used as places of worship and for religious activities;
(c) temporary buildings with a time of use of two years or less;
(d) industrial sites, workshops and non-residential agricultural buildings with low energy demand;
(e) non-residential agricultural buildings which are in use by a sector covered by a national sectoral agreement on energy performance;
(f) residential buildings which are used or intended to be used—
(i) for less than four months of the year, or
(ii) for a limited annual time of use and with an expected energy consumption of less than 25% of what would be the result of all-year use; and
(g) stand-alone buildings with a total useful floor area of less than 50m².
Exclusion (d) means that in practice most farm buildings in England and Wales are unlikely to require an EPC. The exceptions could include packhouses, farm offices or any other building in which people are expected to work which is heated or cooled.
As well as those exceptions listed above, an EPC is NOT required:
– when a property was let before 1st October 2008 (before there was any obligation to have an EPC at the start of the tenancy) and there has been no change of tenant
– when there has been a succession to a Rent Act 1977 or Rent (Agriculture) Act 1976 tenancy
– on a lease renewal
– where the property is due to be demolished
– for carports, covered yards, covered ways and some conservatories or porches attached to existing dwellings.
Residential properties let under Farm Business Tenancies and under the 1986 Agricultural Holdings Act are currently considered to be also excluded but may be a “grey area” which will no doubt be determined by the Courts in due course.
Who prepares the EPC?
This must be prepared by an accredited Energy Assessor and must be made available free of charge to the tenant.
When lettings a property when do I need an EPC?
When granting a new tenancy to a new tenant; or
When granting a new tenancy to an existing tenant (note, the tenancy moving from a fixed term to a periodic tenancy from 1st April 2018 is considered, in this case, to be granting a new tenancy)
After 1 April 2020, the Regulations will apply to all privately rented properties within the scope of the Regulations and so it will also affect your existing tenancies.
There are certain exemptions to the Regulations:
Where all the “relevant energy efficiency improvements” for the property have been made (or there are none that can be made) and the property remains sub-standard;
Where a recommended measure is not a “relevant energy efficiency improvement” because the cost of purchasing and installing it cannot be wholly financed at no cost to the landlord;
Wall insulation exemption: where a particular type of insulation may have a potentially negative impact on the fabric or structure of the property;
Property devaluation exemption: where carrying out energy efficiency improvements will negatively affect the value of the property;
Third party consent exemption: if you are unable to carry out improvement works because you have been unable to obtain third party consent from a tenant, planning authority, superior landlord or freeholder;
Temporary exemption due to recently becoming a landlord (note, there are specific and limited circumstances when this exemption is applicable)
If you believe that a property you rent qualifies for an exemption from the minimum energy efficiency standard, an exemption must be registered on the National PRS Exemptions Register.
Exemptions will be made on a self-certification basis, with enforcement authorities monitoring and auditing applications to ensure that exemptions are registered in compliance with the Regulations. There is no charge to apply for an exemption. No certificate or similar is issued, but the exemption will be logged on the register. False applications can result in a civil penalty.
It is unlawful for a landlord to let a property which is in breach of the minimum energy efficiency standards. Local Authorities will enforce compliance with the Regulations and will have powers to impose civil penalties.
Providing false or misleading information to the PRS Exemptions Register – £1,000;
Failure to comply with a compliance notice from a Local Authority – £2,000;
Renting out a non-compliant property – < 3 months will incur a £2,000 fixed penalty and > 3 months will incur a fixed penalty of £4,000.
Note, where a property is let in breach of these regulations, the lease remains valid and rent is still payable.
EPCs and s.21 notices in England
The Deregulation Act 2015 made changes to the service of s.21 notices to terminate an assured shorthold tenancy in England. The changes came into effect on 1st July 2015 and initially only apply to new tenancies in England which began on or after that date. However, after three years – so by 1st July 2018 – these provisions will apply to all assured shorthold tenancies in England, including those which commenced before the Act was in force.
Therefore if there is no valid EPC at the start of the tenancy where one was lawfully required, a landlord may not serve a s.21 notice to terminate the tenancy on no-fault grounds.
If your EPC expires, you must have a new EPC certificate completed if you grant a new tenancy (note, the tenancy moving from a fixed term to a periodic tenancy is considered, in this case, to be granting a new tenancy), or wish to serve a section 21 notice.
Government guidance on EPCs for non-domestic properties is available on the GOV.UK website (Improving the energy efficiency of our buildings: A guide to energy performance certificates for the construction, sale and let of non-dwellings, 2012).
If you require further information on EPC’s please do not hesitate to get in touch on Tel: 0114 327 0120. We are here to help.