Jurisdiction: England, Wales
Commencement: 1st April 2019
Amends: Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015
Summary
These Regulations introduce measures to improve the energy efficiency of private rented domestic and non-domestic property. Landlords are required to ensure that rented property meets minimum energy efficiency levels and to allow tenants to make energy efficiency requests.
Exemptions are available to landlords if they can demonstrate they’ve been unable to improve the energy efficiency including:
- For domestic properties: the cost of the improvement is greater than £3,500 (inc VAT and third-party finance). This is unless the improvements are fully funded by third party finance, in which case the cap does not apply.
- For non-domestic properties: the landlord was unable to access relevant ‘no cost’ funding (e.g. a Green Deal) to cover the cost of installing the recommended improvements.
Amendment
This amendment is only relevant to domestic properties.
This amendment means that Landlords are now required to fund up to £3500 (inc VAT) for energy efficiency improvements to ensure that their property meets the minimum requirements of an Energy Performance Certificate (EPC) rating of ‘E’ or above. This removes the previous no cost to landlords provision, even where they cannot obtain third party funding (local authority grants or Green Deal finance or other). However, a spending cap of £3500 is placed on the Landlord liability for these energy efficient improvements. (This £3500 includes vat and any third party funding obtained). This means the Landlord is not duty bound to spend more than £3500 on improvements.
However, where third party funding is available to fully cover the costs of improvements no spending cap applies.
Where previous energy efficiency improvements have been made on, or after, 1st October 2017, the landlord may subtract any costs of these improvements from their spending cap. For example, if a landlord spent £800 inc VAT on energy efficiency improvements in December 2017 but the property still does not meet an EPC rating of ‘E’ or above, the landlord must make further improvements to the property, up to a value of £2,700 inc VAT (where not fully funded by third party investment) or prove that they are eligible for an exemption.
Exemptions
High cost exemptions are available where the improvements required to meet an EPC rating of ‘E’ or above for a domestic private rented property would cost over £3,500. In order to obtain this exemption the landlord must submit 3 different quotes from installers which show that the costs exceed this spending cap.
A previous exemption which exempted landlords from the requirement to improve their property because the tenant had not consented to a Green Deal finance charge being added to their energy bills is no longer available. Instead, they are now required to consider alternative funding.
Another exemption that was previously available was the ‘No Third-Party Finance’ exemption. Previously, where a landlord was unable to secure third party finance for improvements they were exempt from the requirement for 5 years. This exemption is no longer available and any exemptions registered on, or after, 1st October 2017 will now expire on 1st April 2020, to give those with the exemption reasonable time to comply.