Property management expert Fisher German has warned that rural landlords may be disproportionately affected by the new Minimum Energy Efficiency Standards regulations announced by government.
The Department for Business Energy & Industrial Strategy has announced its intention to make changes to the Minimum Energy Efficiency Standards regulations following a consultation earlier this year. Since April 2018 these regulations have required landlords of privately rented dwellings to ensure that properties achieve at least an Energy Performance Certificate (EPC) level E before they can be let to new tenants, and from 2020 will require all privately rented domestic properties to achieve an EPC rating of E.
While a series of exemptions currently allow F and G rated properties to continue to be let even after April 2018, the changes announced will see the introduction of an ‘expenditure cap’ of £3,500, which can include VAT. This will mean that once the regulatory changes are made, exemptions which are currently available based on the cost of improvement works will be withdrawn and landlords will be obliged to spend up to £3,500 per property on achieving an EPC of level E before they can be let out to new tenants. From April 2020, the same expenditure cap will apply to any dwellings already let which are legally required to have an EPC.
Fisher German has warned that many rural properties fair worse under the EPC ratings systems, which may see the changes impact more greatly on rural landlords. Rebecca Ruck Keene said: “For most F and G rated properties it is expected that level E will be achievable for substantially less than the £3,500 expenditure cap. However, in some instances even expenditure of £3,500 may not be enough to achieve level E and in these cases, exemptions will continue to be available.
Many traditional, rural properties do not have access to mains gas and tend to fair worse under the EPC ratings system as a result. As such landlords of rural property may be disproportionately affected by these changes.
While this change simplifies the regulations, landlords of older housing stock offered for rent will need to take time to understand the implications of these changes, assess the performance of their housing stock and carefully consider their options for delivering the most cost-effective improvements.
It will be important to keep records of any energy efficiency measures undertaken as evidence of expenditure towards the cost cap. The government is also expected to increase the minimum standard over time with a target of level C by 2030 having been previously suggested. As such, consideration might be given to whether deeper renovation of a property which goes beyond the minimum standards to achieve longer term compliance may be more attractive than undertaking piecemeal improvements.”