As of the 1 October 2008, all properties which are sold or let are required to have an EPC. Since then it has been a legal requirement for private let residential tenancies granted after 1 April 2018 to have an EPC which meets a minimum of band E.
Residential tenancies which fall under the Minimum Energy Efficiency Standards are:
- An assured tenancy (including assured shorthold tenancies) which are granted under the Housing Act 1988
- A regulated tenancy as defined by the Rent Act 1977
- A domestic agricultural tenancy as set out in the Energy Efficiency (Domestic Private Rented Property) Order 201512 as follows; a tenancy which is an assured agricultural occupancy for the purposes of section 24 of the Housing Act 1988; A tenancy which is a protected occupancy for the purpose of section 3 (6) of the Rent Act (Agriculture) Act 1976; or a statutory tenancy for the purposes of section 4 (6) of the Rent (Agriculture) Act 1976.
As of the 1 April 2020 it will be a legal requirement for all existing residential tenancies to meet the minimum band E requirements and Landlords should be taking steps to ensure that a compliant EPC or exemption is in place by this date on qualifying tenancies.
There are a number of exemptions which can be applied for, and whilst the exemptions are an attractive option, these are not as simple as they seem at face value and generally only last for 5 years before further action must be taken.
There are 7 exemptions which can be applied for which are:
- High cost – where the total cost of making the improvements is over £3,500 including VAT, 3 quotations must be submitted, with a letter from the landlord stating they are satisfied that the cost of improvement exceeds the threshold.
- 7-year payback – (applies only to non-domestic properties).
- All improvements made – where all improvements have been made and it still doesn’t achieve a band E.
- Wall insulation – where a property is not suitable for wall insulation. The landlord must obtain written expert advice indicating that the measure is not appropriate, due to negative impact on the structure or fabric of the building. The expert must be either an MRICS Building Surveyor, Chartered Engineer, or Registered Architect (or if not available, advice from an independent installer who meet the standards for that measure as set out Sch 3 of Building Regulations 2010).
- Third Party Consent – where consent from a third party is required. For example, fitting solar panels on the roof where planning consent is required, but refused by the local authority. This is largely on a case by case basis and you will be expected to fight your corner.
- Devaluation – the property is devalued by the recommended measures, in this case a report from an independent surveyor who is a RICS Registered Valuer is required as proof.
- New Landlord – a temporary exemption for new landlords.
There are however some instances where an EPC is not required under this regime such as where a tenancy was granted prior to 1 October 2008 and therefore an EPC was not required, as long as there have been no alterations to the terms of the tenancy since that date, or the tenancy fixed term had expired prior to the 1 October 2008.
Agricultural landlords should be aware that farmhouses which are let on Farm Business Tenancies and Agricultural Holdings Act tenancies do not fall under the standards as they are not considered to be residential tenancies or fall under the non-domestic standards, however those with cottages within the tenancy that are sub-let on a qualifying tenancy will be required to have an EPC if let after 1 October 2008 to the sub-tenant. The responsibility for the compliance of the EPC sits with the sub-landlord to comply.
Failure to comply with the standards could lead to fines of up to £5,000 per property.
If you have any queries or wish to discuss this further you can contact Annabel Gray at Savills on 01904 617825 or Annabel.firstname.lastname@example.org