Don’t get caught out because you didn’t know about the new EPC rules
No, it wasn’t an April Fool’s prank. On 1st April 2019, letting properties became more difficult – and it will become more difficult again on 1st April 2020. New MEES (Minimum Energy Efficiency Standard) regulations mean that landlords with properties rated F or G must now show that the cost to upgrade to an E-rating would be uneconomical. What does this mean for buy-to-let landlords?
Do you want a £5,000 plus fine?
If you let a property that breaches the MEES regulations, you could be slapped with a minimum fine of £5,000. Local authorities can now fine you as much as 10% of the rateable value of a property. If your property is valued at £200,000, then you could receive a £20,000 fine. If you then continue to let the property while it is in breach of the MEES regulations, the fine could rise to 20% of rateable value.
With the ability to raise such large sums through these fines, local authorities can be expected to be rigorous in their pursuit of buy-to-let landlords who try to flout the law. And it just got easier for local authorities to fine landlords, and more difficult for landlords to let properties with an Energy Performance Certificate (EPC) rating of F or G.
What landlords must do for F and G-rated properties
Landlords with a property rated as F or G must now prove that to upgrade their EPC rating to E would cost more than £3,500. In other words, you must spend up to that amount to improve a property’s rating to a minimum of E.
Here’s the rub. Let’s say that your property is currently rated at the EPC rating of F. You must now get an estimate to do the work that would improve the rating to E. If that estimate comes in below £3,500, then you must get the work done.
What if you don’t have the money to make energy improvements?
Let’s say that the estimate you receive counts the cost at £3,000 to upgrade the property so it will receive an E-rating. That’s not an inconsiderable sum. If you cannot afford to make the improvements, you will not be able to start a new tenancy. If you do, be prepared to receive a very hefty fine.
What if the cost of improvements is higher than £3,500?
If the improvements needed would cost more than £3,500, then you can apply for the new ‘high-cost exemption’, and continue to let the property without fear of receiving a crippling fine. This replaces the zero cost exemption.
Could it get any worse?
I’m sorry to say, yes, it could. Some landlords have been able to claim an exemption on their property where the tenant has not given consent to a Green Deal finance plan. This so-called consent exemption is also being removed, meaning you will need to finance the improvements if they are below £3,500.
Finally, if you have an existing exemption because you cannot fund improvements, this will end on 31st March 2020.
What buy-to-let landlords need to do now
First, if you have a property that is currently exempted under MEES regulations, you should ensure that it will remain so under the updated MEES. If it is appropriate to do so, you should request a new exemption now.
Second, if your property is rated F or G, you should review your EPC. This will tell you what changes would need to be made to upgrade the rating to E.
Third, make certain that your property meets the MEES regulations and EPC requirements before 1st April 2020.
Make sure your property is covered under the new MEES regulations. If you are in any doubt or need advice, don’t hesitate to get in touch with Ezytrac at +44 0 1522 503 717. We’re here to help all our landlord clients, with the services you need, and the updates on landlord law you cannot afford to miss.
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