How energy efficient is your buy-to-let property?

Landlords will need to ensure their rental properties meet minimum energy efficiency standards before they can be let out, under new rules being introduced this spring.

With effect from 1 April 2018, it will be unlawful to let out a domestic property which doesn’t meet the new Minimum Energy Efficiency Standard (MEES). To meet this standard, properties must have an Energy Performance Certificate (EPC) rating of E or above. These certificates set out how energy efficient a property is and how much energy bills should be.

A is the highest energy efficiency rating, with F and G the lowest ratings. Tenancies cannot be renewed or granted after 1 April 2018 if they don’t meet the minimum energy rating. Landlords who don’t conform with the new regulations could be fined up to a cumulative figure of £5,000 by their local authority, and non-compliance could even result in a notice to gain possession at the end of the tenancy.

Renting out properties which fail to meet the standard will be outlawed entirely beyond April 2023. The new rules apply to nearly all domestic private rented sector properties in England and Wales.

What do landlords need to do?

If you own a property you let out, your first step should be to find out its current energy efficiency rating. If work has been carried out on a property in recent years, it’s a good idea to obtain an up-to-date certificate that will take improvements into account.

If you’re not sure what the EPC rating on your rental property is, you can search the EPC register by postcode. EPCs were introduced in 2007 and are valid for 10 years from the date of issue.

If your property doesn’t meet the minimum standard of E or higher, you’ll need to take steps to improve its energy efficiency. These could include ensuring the property is properly insulated so that heat isn’t lost through walls or the roof, and renewing or adding new window or door seals. Installing energy-efficient lighting and a smart meter could also help to improve efficiency.

Making these improvements should help to keep maintenance costs down in the long term and could well improve the value of the property. Tenants will also benefit from a more comfortable home and lower energy bills.

Exemptions

Although the vast majority of rental properties must meet the new minimum standards, there are a few limited circumstances where an exemption may apply.

If you can prove that any changes which make your property more energy efficient could decrease the property’s value by 5% or more, or if energy efficiency upgrades could damage the property, an exemption may apply.

Your property may also be exempt if you’ve made all the necessary improvements and it still doesn’t meet the minimum standard.

If you’re a new landlord and have only just purchased your buy-to-let property, you can apply for a temporary exemption for six months from the date of taking ownership of the property.

Exemptions must be registered on the National PRS Exemptions Register which is currently running as a pilot.

You can find full details of the Energy Efficiency Regulations here.