Landlords and tenants of privately rented domestic and non – domestic properties in England, Wales and Scotland will soon be affected by forthcoming regulations under the Energy Act 2011. These regulations could have significant implications for some landlords who could be left in a position where they are unable to rent their properties until they make costly energy efficiency improvements.
Energy Efficiency of buildings
England and Wales
From 1 April 2016 landlords of domestic properties will not be able to unreasonably refuse a request made by their tenants to consent to the making of specified energy efficiency improvements. The process through which such a request can be made, any exemptions from this requirement and the sanctions that may be imposed in case of non – compliance will be specified in the regulations that have yet to be consulted on.
From 1 April 2018 landlords will not be able to rent out domestic and non – domestic properties that fall below a specified level of energy efficiency ( likely to be an 'E' rating), until they have made specific energy efficiency improvements first. Both the required level of energy efficiency and the type of improvements that need to be made will be specified in Regulations that have yet to be consulted on. In addition, the regulations will provide for penalties, including civil penalties, that may be imposed in case of non – compliance.
Both of the key dates identified represent the latest point at which the required regulations, can come into force. It is therefore possible that the specified measures may come into place at an earlier stage. For example the regulations specifying a required level of energy efficiency could be in force from as soon as 1 April 2016. The proposed regulations to implement these provisions of the Energy Act have not yet been published for consultation. As a result, there is some uncertainty as to the exact content of the specified measures. However, in relation to the energy rating that domestic and non – domestic properties will need to achieve the UK Government has indicated that this is likely to be an E rating.
Landlords should be reviewing their property portfolios now to identify properties with energy ratings of F and G that will be unmarketable beyond 2018 (or earlier) and planning energy efficiency improvements most cost effectively.
Similar measures to the ones provided for England and Wales will be introduced in Scotland from 1 April 2015 at the latest.
No such measures have been announced in Northern Ireland.
Changes to EPCs and DECs
From 6 April 2014 the Energy Performance of Buildings (England and Wales) (Amendment) Regulations 2014 will bring further changes to Energy Performance Certificates (EPCs) and Display Energy Certificates (DECs) in England and Wales.
The main changes are briefly presented below:
Energy Performance Indicator
Currently an EPC needs to provide information about the asset rating of the building. From 6 April 2014, the asset rating will be substituted by the 'Energy Performance Indicator'. This is an indication of the energy efficiency of a building (or building unit) that is calculated in accordance with a methodology approved by the Secretary of State and is expressed on a scale of A+ to G (or A to G in the case of dwellings). G represents the least energy efficient rating.
Lower fees for registering EPCs
The fees for registering EPCs on the Landmark Register are currently £1.67 for EPCs relating to dwellings and £11.81 for EPCs relating to non-dwellings, Display Energy Certificates (DECs) and inspection reports. From 6 April 2014, the fees will be set at £1.30 and £9.73 respectively.
Currently failure to a display a DEC and failure to include the asset rating of a building in any advertisement of the sale or rental of the building in commercial media is not subject to penalty charge notice. From 6 April 2014 this will no longer be the case. The breach of the duty to display a DEC will attract a £500 penalty, whereas the breach of the duty to include the Energy Performance Indicator of the building upon its sale or rental will attract a £200 penalty.
To avoid these unwelcome fines owners and landlords of public buildings should check that all of their properties are displaying a valid DEC. Anyone involved in the marketing for sale or rental of a building should take care when preparing an advert for sale or rent.