New regulations are coming into force in 2016, which will prevent landlords of energy inefficient non-domestic private rented properties from granting a new tenancy or extending or renewing an existing tenancy of a property after 1 April 2018. These regulations will also prevent landlords from continuing to let any energy inefficient properties after 1 April 2023.
What standard is required?
Energy Performance Certificates (EPCs) indicate the energy performance of buildings, ranging from band A (the most energy efficient) to band G (the least energy efficient). Following the introduction of the regulations, a privately rented property will be sub-standard where the valid EPC indicates an energy performance below band E.
Are there any exemptions?
There are various exemptions which landlords may be able to take advantage of, although they must register certain information on the Private Rented Sector (PRS) Exemptions Register when relying on one of the relevant exemptions. Examples include if there are no relevant energy efficiency improvements that can be made to the property, or necessary consents to works cannot be obtained. Exemptions expire after 5 years following which the landlord must re-register and re-registration is also required every time the building is sold.
What are the implications for landlords?
Sub-standard buildings (those with a rating of F or G) must be brought up to at least an E rating, and significant financial outlay may be required to achieve this.
Additionally, financing options for energy inefficient properties may become restricted, inefficient properties will become less marketable, and reductions in the open market values of inefficient properties may have a negative impact on rent reviews.
Planning for the future
Landlords are best advised to act now to minimise the impact of the upcoming regulations. This may include assessing and planning any work which might be necessary to bring a sub-standard building up to the required rating, or disposing of properties where the cost of complying with the regulations is prohibitive. Failure to comply with the regulations will result in details of the non-compliance being published on the PRS Exemptions Register, together with a financial penalty.
For further information or advice on energy performance or for guidance on dealing with any landlord and tenant issues, speak to a member of our commercial property team today Bray & Bray have three main offices across Leicestershire, feel free to phone or pop in to talk to our solicitors.
Leicester 0116 254 8871
Hinckley 01455 639 900
Market Harborough 01858 467 181