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EPCs in private rented sector: implications for landlords

Chandelier

ChandelierWith the introduction of the Green Deal and the BPF Energy Efficiency and the Private Rented Sector Guide,  it is at long last time to suspend cynicism about the EPC (Energy Performance Certificate) regime.

It now looks as though EPCs will – in the future – have some actual effect and now is the time to start planning for that inevitability.

Tackling poor energy efficiency and reducing carbon emissions for existing housing stock is a major part of the government initiative especially since 13.5% of private rented sector properties (PRS) are only rated F or G.

Many landlords have been reluctant to invest money in energy efficiency because it was the tenant who reaped the benefit in lower energy bills.  Under the Green Deal, the landlord will be able to carry out the work and the tenant ultimately pays the cost.  In essence the capital cost of the work is borrowed under a Green Deal Plan and repaid in instalments by the energy bill payer resulting in the loan repayments being funded by the savings in energy costs.

Carrots and sticks
The Green Deal is intended to be a major carrot for landlords and the Energy Efficiency Guide contains two sticks that the government will wield in the future. These are:

  • By April 2016 (possibly earlier) PRS landlords will not be able to refuse unreasonably a request from their tenant to carry out energy efficiency improvements.
  • By April 2018 (and again it could be earlier) most landlords will be unable to rent out properties which fall below a minimum EPC rating (rumoured to be an E).

The Green Deal is still in its infancy but the green agenda is not.  The Guide advises landlords on how to develop a strategy for energy efficiency improvements whether you plan to do them yourselves or if the tenant requests these.  It is a first step in raising awareness amongst tenants and landlords of the importance of assessing the energy performance of a property before they commit.  In the fullness of time it is likely that the rent and capital value of a private property will be affected by energy efficiency so it is worth beginning to give the subject your attention from now onwards.

Contact us for up to the minute advice. 

By Elizabeth Deyong, Head of Commercial Property at Cambridge solicitors Barr Ellison.

Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.

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