Beware!

Did you ever wonder if Energy Performance Certificates were intended to provide anything more than just useful information? Could they have been intended for more nefarious purposes? 

Sections 43 and 49 of the Energy Act 2011 provide an answer in no uncertain terms because those sections will prevent a landlord from letting property that is not energy efficient. Property is currently rated A to G on Energy Performance Certificates and the present expectation is that a rating of F or G will fall foul of these requirements, preventing letting.

Prepare?

What can you do in order to ensure that you are not left holding property you cannot let? 

Sections 43 and 49 are not yet in force and regulations still need to be drafted to put meat onto the bones of those sections. The regulations are to be in force by April 2018. Thus there does seem to be time for landlords to review their property portfolios and do whatever work is necessary to try and ensure that their properties will, at least, meet the minimum required standard of E. Indeed, leaders in the property industry have already started carrying out appraisals of their property portfolios in anticipation of this scheme being implemented. 

However, it does seem likely that landlords who fail to achieve the minimum E rating will not necessarily be doomed. A landlord will still be able to let such a property if he has carried out the maximum package of works under a Green Deal Finance Package. This is subject to the golden rule. In order to satisfy this golden rule, the projected savings on an energy bill resulting from the Green Deal Works during the life of the Green Deal Finance Package must equal or exceed the cost of borrowing and repaying the loan to the provider of the finance for the Green Deal Works Package. In other words, the savings must justify the costs.

Ignore?

As the sections are not in force yet and the regulations do not exist, landlords might be forgiven for delaying assessment of their portfolios or the carrying out of works, in anticipation of what may unfold. Landlords could also be forgiven for asking whether this is a fuss about nothing, because it might not happen. 

This is a difficult question to answer. While it appears that there is significant opposition to the implementation of the scheme from within government, we do live in green times and Energy Performance Certificates were probably never just meant to be interesting pieces of paper. It is likely that failure by the government to enable sections 43 and 49 would not go unnoticed and so, for the time being, it may be unwise for landlords to ignore this impending scheme and its potentially draconian sting of being left holding property that cannot be let. 

Nevertheless, it is true to say that until the regulations are finalised and published, it will be difficult to predict how this scheme will work in practice.