Reside’s Toby Martin dives into the puzzling world of minimum energy standards in the private rental sector, and how they apply to Listed properties.
By law, any rental property must have an energy efficiency inspection carried out in order to place the property on the rental market. The energy efficiency of the property is graded between A and G, with A being the best rating. The property’s energy efficiency is summarised in a report called an Energy Performance Certificate (EPC), which must be included in the marketing particulars and provided to any prospective tenant.
A recent law, the Minimum Energy Efficiency Standards Regulations, was introduced to prevent landlords from renting out properties with an F or G energy rating without first carrying out the improvements suggested in the EPC to increase the overall rating. The intention is for the landlord to carry out any works necessary to raise the overall score to an E rating.
The government wants to raise the minimum energy efficiency standards to EPC Band C by 2025 for new tenancies in private rented homes, and by 2028 for all tenancies. However, this legislation is yet to be finalised.
Initially, it was thought that Listed properties were exempt from the requirement of even having an EPC due to the difficulty landlords would encounter when trying to improve the property. Listed buildings regulations restrict many of the improvements that are often suggested in EPCs, such as fitting double glazing windows.
However, recent clarification made it crystal clear that all properties, including those in Listed buildings, must obtain an EPC when going on the rental market. Listed properties, mainly due to their age and limitations on energy improvements, are more likely to receive low scores, but landlords of these properties should know that it is still possible to go to the rental market, even if it is impossible to increase the energy rating to the required E rating.
Landlords of low-scoring properties must carry out the recommended improvements to increase the energy efficiency of their property, but there are certain situations in which properties can be registered as exempt from these requirements. The most relevant of these exemptions are:
- ‘High cost’ exemption: The prohibition on letting property below an EPC rating of E does not apply if the cost of making even the cheapest recommended improvement would exceed £3,500.
- ‘All improvements made’ exemption: Where all of the suggested energy efficiency improvements for the property have been made, or there are none that can be made, and the property remains sub-standard, an exemption from further improvements can be obtained and the property can be placed on the market.
- ‘Consent’ exemption: If third party consent is required to carry out a suggested improvement, for example from a freeholder or local authority, and that consent cannot be obtained, an exemption can be registered.
Despite the minimum energy standards regulations, any property can be brought to the rental market – you just need to know how to navigate the EPC maze.