Do I Need to Renew an EPC During a Tenancy?
Sometimes keeping on top of the numerous move in dates, deadlines, and sea of regulations can be enough for any seasoned landlord to let something slip through the net; and with an Energy performance certificate lasting a mere decade after its issue, it can be easy to go through numerous tenancies on autopilot in regards to this document. However, with an increasing number of the rental demographic becoming aware of the repercussions of ignoring the sectors impact on carbon emissions and the environment, landlords must ensure their rental opportunities are up to scratch. With the introduction of new EPC regulations in 2020 updating a landlords EPC obligations, and the initial wave of expired certificated coming as recently as 2018, many landlords are still left asking if they need to renew an EPC during a tenancy.
What Is an Energy Performance Certificate?
Essentially an Energy performance Certificate, or EPC, is an evaluative measure implemented by the UK government allowing the energy efficiency and carbon dioxide levels of a property to be simply determined and assessed by interested parties and local authorities.
In order for a landlord to receive an EPC an assessor must first carry of an extensive Energy Assessment Survey of the property. This inspection will evaluate both the internal and external aspects of the property that could contribute towards excessive emissions or inefficiency.
What Is Involved in an EPC Check?
When a rental property undergoes an evaluation of its energy performance there are a number of key influences that comprise the deterred grade the property achieves. As expected the properties lighting, heating systems, hot water, cooling and ventilation services are considered; however the physical characteristics of the buildings construction, i.e. its floors, glazed windows, roofs, insulation, walls ect, alongside the intended purpose of the various spaces throughout the property.
Once each aspect of the rental property has been inspected, each will be given a score by the assessor; these values are then used to determine the overall energy efficiency of the property. The highest score a property can achieve is 100, with the ECT rating of “A” being obtained if the rental scores between 92 and 100. In order to be able to let the property out to tenants, the rental must achieve a score of at least 19 points, allowing it to be scored an EPC rating of “E”.
What Happens If an EPC Runs Out During a Tenancy?
Energy performance Certificates are valid for 10 years upon the date of issue, however with such a long half-life coming with this approval, some property owners have found that there is no guarantee the rental property will still live up to the strict standards upon the EPC’s renewal.
But, do you need to renew an EPC during a tenancy? Simply put a landlord is not required to immediately renew an EPC for a rental property solely because the documentation has expired. If the term of the EPC expires before the tenancy period the landlord does not have to immediately undergo another inspection, however with such a long period since the last EPC was issued, it would be beneficial to be conscious of, or perhaps begin to make more environmentally sound improvements to the property before the next assessment of the rental’s efficiency.
As per the Energy Performance of Buildings Regulations 2012, a rental property is only required to have a valid EPC when it is being marketed to new tenants; therefore if an existing certificate expired during a tenancy, the landlord would have to obtain another before listing the rental and signing an agreement with new tenants.
Is It Illegal to Let a Property Without an EPC?
Any property that has been rented to tenants since 2008 has been required to produce an Energy Performance Certificate. As mentioned briefly mentioned above, a landlord is unable to advertise their rental property to tenants unless their property has an EPC rating of “E” or above, preventing them from begging a new tenancy unless their rental meets Minimum Energy Efficiency Standards, but more on that later.
Government regulations also state that if a rental property is “modified to have more or fewer parts than it originally has and the modification includes the provision or extension of fixed services for heating, air conditioning or mechanical ventilation then an EPC will be required.” With this being said, the tenants are not required to be provided with a copy of the new documentation until the work to the property has been completed. However it is essential for landlord to keep in mind that any adaption to the building that changes “services that condition the indoor climate for the benefits of the occupants, will require the rental property to undergo another Energy Performance review before it is advertised to potential tenants.
An important distinction is to be made however, as if the rental property was to have an “internal refit” of these same services, the landlord would not be obligated to obtain a new EPC for the rental property. This remedial work to the property will of course still have to abide by any appropriate, gas, electrical safety regulations.
If a landlord is found to be renting out their buy to let property whilst it has an invalid EPC or the property didn’t satisfy the minimum criteria of the efficiency assessment, the local authority can take action. If notified by a tenant, or if found through internal investigations, officers from trading standards can demand that a landlord produce a valid EPC for the rental. If the property owner is unable to provide the requested documentation within 7 days they are liable to pay a penalty charge. Additionally, landlords are legally required to issue each new tenant with a range of new documentation before they move into the rental property, with one of these being an EPC. If upon signing a new tenancy agreement and commencing a tenancy period the tenants have not been issued with a valid EPC for the appropriate property, a fixed penalty of 12.5% of the building’s rateable value will be charged, with a fee of £750 being issued to the landlord if this cannot be applied. Whilst the penalties that can be issued to landlords for breaching these regulations is capped at £5,000, if the landlord continually fails to provide an EPC to a enforcement officer from the local authority, another fine of £200 will be issued.
Are Tenants Entitled to a Copy of the EPC?
Prior to a tenant moving into a rental property, the landlord must first issue them with a valid Energy Performance Certificate. If the landlord fails to provide this documentation to any occupants of the let they will be prevented from being able to serve the tenants with a section 21 notice. With this being said, the documentation does not need to be offered to every potential tenant that comes to view the property, merely the ones that genuinely wish to proceed with an agreement.
With the latest generation of increasingly energy conscious renters, having a higher EPC rating can be a huge determining factor as to where tenants want to make their next home. If you property has a higher EPC rating than surrounding lets, it affords the opportunity for a more marketable and appealing rental opportunity, with the general running costs also being far lower.
What Is the Minimum EPC Rating to Let a Property?
Implemented in April 2018, the Minimum Energy Efficiency Standards, or MEES, applies to the overwhelming majority of rental properties in England and aims to not only make rental property owners more aware of their energy efficiency, but hold them more accountable if their let doesn’t hold up to the current sustainable vision being carried out by the UK government.
Providing the type of tenancy commenced between both rental parties is an Assured Shorthold Tenancy, Regulated Tenancy or a Domestic Agricultural Tenancy, this regulation upholding a minimum threshold of environmental standards is upheld. As of the implementation of the MEES a landlord is unable to let out their rental property to tenants unless their property achieves a rating of “E” or above.
Upon each review of a rental property improvements will be recommended that will aid the let in achieving a higher energy efficiency grade. Whilst these advancements for the property are provided to the landlord regardless of if the let score an energy rating of “E” or lower, if the rental fails to meet this minimum standard these changes must be implemented before the property can be occupied again.
With this being said, the move made by the government at least recognises the sometimes lofty costs involved with making such changes to a property, with a limit being placed on the amount landlords are required to spend towards these efforts being placed at £3,500.
But, this doesn’t always have to come directly out of the rental owners pocket, a landlord may be able to obtain a grant from a third party in order to aid the financing of any improvements that need to be made to the rental property in order to make it increasingly energy efficient. This external funding is only required to help the rental in question achieve the minimum viable energy efficiency rating of “E”, however if a landlord is able to gain such funding the cap of £3,500 is not applied. If a landlord wished to obtain one of these third party grants to help with the remedial work on the property, they are able to turn to their local authority, the Energy Company Obligation and Green Deal finance.
It is important to note that even with this financial assistance, these funding initiatives are under no obligation to cover the entire costs of the appropriate renovation. If landlords are unable to secure the total costs of the remedial works, or the amount granted by these government bodies is less than £3,500, the landlord is required to make up the remaining sum themselves. For landlords questioning if any work on the property to achieve these means can be backdated, only costs incurred after October 2017 in regards to energy efficiency can be contributed toward this £3,500 spending limit.
If the landlord is in a position to independently finance the appropriate improvements to the rental property, they are not legally required to spend the full £3,500 spending cap, but whatever the appropriate amount is to achieve at least an “E” rating.
In the circumstance that the amount the required improvements would cost more than the £3,500 cap landlords are encouraged to make all the possible changes they can to the property and then file for an “all improvements made exception.” If a landlord successfully registers an exception then the ban on letting their rental property, even if it failed to achieve an “E” rating, is temporarily lifted. However, in order to ensure that rental property owner’s effort to improve the energy efficiency of their property never grows stale, these exceptions only apply for 5 years, half the lifespan of an Energy Performance Certificate. Alongside the ability to file for an exemption due to the high costs involved with making such improvements, landlords are also able to file for an exception if the recommended changes comprise cavity, external or internal wall insulation, where a third party needs to first approve any work conducted on the property, or where the recommended work would depreciate the value of the rental by more than 5%.
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