Landlords set to be affected by new 2018 EPC Regulations

Creating greener, more energy efficient rental properties isn’t always a top priority for landlords.

But, as of 1^st April 2018, any rented property that does not comply with the new changes to the Energy Performance Certificate (EPC) regulations could diminish your marketability and cost you thousands in fines.

So as the deadline draws near, it’s worth making your property’s energy efficiency levels your main concern.

This has been a long-standing concern for everyone involved in the industry and has particularly created great uncertainty for landlords and agents. Earlier this year the Dept. for Energy & Climate Change finally completed the 2018 EPC regulations, which set out the minimum level of energy efficiency for private rented property in England and Wales.  In a nutshell, this means as of 1 April 2018 it will be unlawful to let or lease a property that has an EPC rating lower than E.

As expected, these new EPC requirements apply to both domestic (from one-room flats to detached houses) and non-domestic properties including factories and offices. The changes to the regulations will be based on CO2 emissions for commercial property and on fuel costs for domestic dwellings.

So what does this mean for you? Well when it comes to deadline day, landlords could find it increasingly difficult to let a house/flat or renew a commercial lease when the EPC rating is below an E. Government data reveals that between the years 2008 and 2015 35% of non-domestic buildings that went under an EPC survey achieved an E,F or G rating as did 26% of domestic properties surveyed within the same time frame. This suggests that a significant proportion of the UK rental market could be affected by these changes.

As so many landlords will need to make changes to their properties by April next year, there could well be a surge in rental prices. The upgrade costs to make sure properties comply with the regulations could be exceptionally pricey, potentially forcing landlords to increase rent to cover those costs. It may also not be worth offloading a property with a poor EPC rating, as the new regulations are likely to have a significant effect on market value.

Enforcement of these regulations falls to local Trading Standards Officers and while the penalties haven’t yet been finalised, non-compliance fines will depend on the rentable value of the property. That could mean fines of anything between £5,000 and £150,000.

If you’re a landlord and are worried about the upcoming changes, the first step is to talk to property solicitors or experts who can advise you on your situation. A local energy assessor will be able to offer you tailored expert advice and give you an EPC if you need one.  Even if a property doesn’t meet the required standards, it doesn’t necessarily mean you’ll be faced with a large repair bill for energy efficiency upgrades. You can also speak to a solicitor to discuss finer details or talk over the penalties for non-compliance.

Vishalee Amin of Howell Jones solicitors explains “Exemptions may be made for certain types of properties via secondary legislation. Trading Standards Officers will enforce the rules for commercial properties; the precise level of fines will also be part of this secondary legislation.” In this case landlords could potentially let a property with an EPC rating below the required standard.

Whatever your circumstance, there’s still time to prepare your property before the new changes take affect. If you’re still unsure, it is advised you receive an expert overview to make sure you are complying with the regulations, but with less than a year on the clock, it’s better to act sooner, rather than later.