Landlords urged to assess energy ratings or face new legislation declaring their property ‘unlawful’

Landlords and those interested in acquiring leasehold property are being advised to familiarise themselves with new legislation, known as the Energy Act 2011, which will make it unlawful from April 2018 to let property with an EPC (Energy Performance Certificate) rating below grade E.

EPCs give information on how to make a home or building more energy efficient and reduce its fuel costs. All properties constructed, sold or rented require an EPC, with ratings ranging from A for the most efficient, to G for the least.

Philip Overend, an accredited Energy Assessor and Chartered Surveyor who carries out energy assessments across Yorkshire and Humberside, on behalf of Jones Lang La Salle says: “The forthcoming tightening of the current building regulations, along with new versions of more stringent EPC software (calculates the energy rating) will make it even harder for landlords to achieve the higher EPC bands.”

He adds: “It’s not unknown for properties to drop one or two bands when their old rating is re-assessed by the new software, and a healthy proportion of commercial and residential property in Yorkshire and Humberside is already rated F and G. Consequently a growing proportion of homes and buildings in our region will be affected up to and beyond 2018.”

RICS (Royal Institution of Chartered Surveyors) says prudent landlords should begin reviewing their portfolios now to identify the ‘at risk’ properties of E, F or G rating. The right consultant can advise upon upgrade measures and costs in the context of any property’s wider refurbishment requirements. Meanwhile, potential investors should seek advice before purchasing any kind of property.

Philip adds: “Improvement costs may be unrealistic for many. However, assistance for landlords may exist through Enhanced Capital Allowances or loans from the Carbon Trust, and once launched, via the Green Deal.”

The Green Deal is a mechanism where finance providers supply the upfront capital to fund improvements recommended by a Green Deal Assessor. The cost for the installation is recovered through its lifetime via a charge on the utility bill that stays with the home or building until the loan is repaid. Arrangements will become clearer when the Green Deal is launched next year.

Geoff White, RICS North and Midlands Policy Manager adds: “The Green Deal and the staggering of the introduction to the Energy Act 2011 legislation will mean that improvements will take place as part of the normal leasing/refurbishment cycle, therefore supply should not be significantly affected.

“However, older rented property is more likely to be in conservation areas where planning restrictions prohibit landlords updating old draughty windows with energy saving measures such as double glazing, so it’s important that the Green Deal effectively addresses this.”

Phillip concludes: “If landlords pro-actively assess the issue now and obtain strategic advice, any costs falling to the investor can be both mitigated and then spread into the normal cycle of lease expiries and refurbishments. The key will be to examine each property on its own merits.”

For more information on the Energy Act 2011 and the Green Deal please visit the Department of Energy & Climate Change website: Department of Energy & Climate Change