If you're looking to purchase a property to let out to parents, siblings or children, we've listed 4 things to be aware of.
Under the new government rules, a rental property must meet a minimum Energy Performance Certificate (EPC) rating of E. This rule will extend to all rental properties, irrespective of the tenancy situation, by April 1, 2020.
The Minimum Energy Efficiency Standards (MEES) regulations apply to new lets and renewals of tenancies with effect from 1 April 2018 and for all existing tenancies on 1 April 2020. It will be unlawful to rent a property which breaches the minimum E rating, unless there is an applicable exemption.
Landlords with substandard properties will have to carry out works to improve the EPC to a rating of E or above, or face penalties of up to £4,000. However, only appropriate, permissible and cost-effective improvements will be required under the regulations.
MEES apply to all residential properties required to have an EPC and to all tenancies let under Assured Tenancies, Assured Shorthold tenancies and Rent Act tenancies.
There are separate regulations which were effective from 1 April 2016 under which a tenant can apply for consent to carry out energy efficiency improvements in privately rented properties.
Why these are changes taking place?
The built environment has been identified by government as a major contributor to Greenhouse Gas (GHG) emissions and thus poses a threat to the UK meeting its 80% carbon reduction target by 2050. The Government hopes that the MEES regulations will help improve the energy efficiency of older buildings while working towards achieving the UK’s carbon reduction targets. Landlords letting properties with an EPC rating of F or G may be liable to pay large fines from April 2018.
What are the exemptions?
Landlords will be eligible for an exemption from reaching the minimum standard where they can provide evidence that one of the following applies:
- Where all possible cost-effective improvements were carried out but the EPC rating remains below an E rating. 'Cost effective improvements' are those that have been installed with a Green Deal.
- Where consents from a third party, such as a lender, freeholder or sitting tenant, for the improvement works were denied, or were provided with unreasonable conditions.
- Where carrying out the works would reduce the market value of the property by more than five per cent, as evidenced by a qualified independent surveyor.
An exemption will last for up to five years and must be pre-registered on a central register for a landlord to rely on it.
Further information can be found on the Residential Landlord Association’s website here.