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Landlords, Are You Aware of the Provision for Minimum Energy Standards?

As part of the Energy Act of 2011, a new provision will be legislated from April 2018 that will make it unlawful to let residential or commercial properties with an EPC rating of F or G, the two lowest grades of an energy performance certificate. It is estimated that approximately 20% of non-domestic properties could be within the F & G minimum standard bracket.

This could have a significant knock-on effect to landlords who wish to:

  • Market a property – if the property is below the minimum standards then marketing will be impossible unless the energy efficiency was to be upgraded to meet these standards. The standards could apply to all lettings and re-lettings, including sub-lettings and assignments.
  • Valuations – the valuation of a property could be affected to those that are not within the minimum standards.
  • Implications for dilapidation assessments would also exist.

Given this risk to property owners, it is essential that a full understanding of the energy efficiency of your property portfolio should be collated. Once an understanding is gained, property owners will need to assess the costs and viability of undertaking works to properties that require it and consider how the property’s value may be affected.

The Green Deal

The Government has recently introduced the “Green Deal”, an innovative funding system for energy efficiency improvements to residential and commercial properties. The Green Deal may provide a financial solution to Landlords to support energy efficiency related improvements, the following improvements being the most common:

  • insulation, eg solid wall, cavity wall or loft insulation
  • heating
  • draught-proofing
  • double glazing
  • renewable energy generation, eg solar panels or heat pumps

Landlords will need to achieve an EPC “E” rating or have implemented the maximum package of works allowable under the Green Deal (even if the property falls short of the “E” rating). Exemptions may be made for certain types of properties via secondary legislation, the precise level of fines will also be apart of the secondary legislation.

Even though this provision won’t be legislated until April 2018, it’s important to be in the know.

What steps should you take?

  1. Contract an EPC assessment on all properties in your portfolio.
  2. If a property has an EPC rating of “F” or “G” (or at risk of becoming so) a plan should be put in place to improve the energy efficiency of the property. This should include viability, costs, benefits and weighing these against potentially re-marketing the property.
  3. Assess whether the Green Deal is a viable option for financing the works.

If you require an assessment of your portfolio, more detailed advice on what to do or need a maintenance company to carry out refurbishment work, please contact our office on 01454 316718 and speak with Mike Ford. Mike is a pioneering buy-to-let expert and a leader in the field of property finance. As a seasoned specialist advisor with experience in the property market since 1980, Mike has helped hundreds of clients build enviable property portfolios.

About The Author

Everyone at Edison Ford works as a team to bring you this content. The content is either written by Kieran or Peter and the advice included in our guides comes from our own experiences and research collectively. We hope you find our content insightful and if you have any suggestions, then please feel free to email Peter. You can read more about everyone here.

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