Landlords with existing tenancies on properties rented out in the private rented sector are being advised to take note of the next deadline that relates to the energy performance of the building.
The next deadline means that from 1 April 2020 it will be unlawful to rent any property that has an existing or continuing tenancy with an energy rating of E or below.
It follows the 1 April 2018 deadline which meant it became unlawful to grant a new lease to a new tenant or renew a lease with an existing tenant unless the Energy Performance Certificate (EPC) has a minimum rating of E.
Clare Gregory from Clarke Willmott LLP in Cardiff is now advising that landlords start making plans so that any properties in their portfolios are up to standard come the 2020 deadline. If not they could face a fine of £4,000 which will be imposed for any breach.
Clare said: “From a tenant’s perspective, the forthcoming changes mean that they may find that they can potentially drive down their rent or threaten to move on if the required improvements aren’t made. The landlord will then be unable to re-let or sell the property without carrying out potentially costly works to improve its energy efficiency rating. If this scenario is repeated across a portfolio of investments, then the risks are easy to see.
“A landlord may find themselves with a portfolio of properties which can’t be let without expensive improvements being carried out, and not even able to cut their losses and sell poorly performing assets which fail the EPC test. When looking at their list of legal obligations, landlords might see the introduction of this legislation as another hoop to jump through. However, they have been brought in as a way to improve energy efficiency of homes.
“Thinking they can do little or nothing is therefore not really an option unless owners are happy to risk ending up with a portfolio of void properties on their hands, whereas undertaking a programme of improvements over the next couple of years could help to spread the cost and minimise future risks. There is still plenty of time to make sure any properties are up to scratch in terms of energy performance. Conversely, savvy landlords who are already ahead of the game and have better rated properties will be able to attract those wavering about whether to stay put or move on.
“The obvious thing to do is to undertake any energy efficiency improvements during current void periods or lease breaks. They will more than likely be simple, low-cost measures which can be implemented and will have a significant impact on the energy rating of a building. We will be encouraging residential property owners to prepare a programme of capital improvements so that the necessary spend can be spread over the next couple of years rather than left to the last minute.
“By undertaking works and improving the energy rating there is the additional benefits of reduced energy use and operating costs, which may be attractive to potential tenants. Better still, it could also avoid a potential fine that could run into thousands of pounds!”