Summary and implications
Regulations may be introduced within the next four years to ensure rented properties, both commercial and domestic, meet minimum energy efficiency standards.
The Energy Bill may introduce the new powers. Once in force, a landlord will not be allowed to let a property which does not meet the required EPC rating. Energy and Climate Change Minister, Greg Barker, indicated on 14 June 2011, that the minimum EPC rating for rented properties would become “E” from 2015.
The Government is to commission a review of energy efficiency in the private rented sector although this can’t be started until at least one year after the Green Deal framework regulations come into force. A report of the review must be published before 1 April 2014. If, having regard to the report, the Secretary of State considers that:
- The proposed regulations will improve the energy efficiency of non-domestic private rental properties;
- The proposed regulations will not materially decrease the number of properties available for rent,
then the Secretary of State will have the power to make the regulations. The regulations won’t be able to come into force earlier than 1 April 2015.
Impact of the changes
The proposed changes are, in part, a government response to statistics that buildings are responsible for over 40 per cent of the UK’s total carbon emissions and that 75 per cent of the buildings that will exist in 2050 have already been built. This highlights a need to retrofit and improve energy efficiency in existing buildings.
If introduced, these regulations would likely have a far-reaching impact on both the commercial and residential property markets, with Landlords potentially prohibited from renting properties where appropriate energy efficiency measures have not been undertaken. Presumably an EPC rating below an E will be the trigger for taking appropriate energy efficiency measures. Reports suggest that at least 682,000 properties would have to undergo some form of improvement in order to better their energy efficiency.
In the meantime, DCLG have announced plans to amend the current EPC Regulations. Under the proposed changes:
- The obligation to provide energy information when a residential property is sold will be extended. Information must be provided whenever any buildings, residential or commercial, are offered for sale or rent;
- It will no longer be sufficient to include the asset rating of a building in sale/rental particulars. There will also be an obligation to provide a full copy of the EPC certificate.
Reports in April suggested the changes would be implemented as early as July 2011. However, an announcement in mid-June delayed the changes to an as yet unspecified date.