Energy Performance Certificates are nothing new and most landlords dealing in either residential or commercial property will be aware of the need for them.
However, new rules are coming into force between 2016 and 2018 which could seriously impact Landlords on their ability to sell or let their residential and commercial properties in the future.
It is essential that Landlords act quickly to avoid being left with potentially unlettable property stock.
What is an Energy Performance Certificate?
An EPC provides a rating on how energy efficient a building is. The efficiency of a building is graded from “A” to “G” with “A” being the most efficient. An EPC is valid for 10 years and should be carried out by an accredited Energy Assessor.
The Current Position – when do you need an EPC?
It has long since been a lawful requirement to have an EPC and recommendation report, under the following circumstances:
• If you rent out or sell premises (residential or commercial)
• Upon completion of development; and/or
• When certain alterations are made to your property.
You can be fined if you do not make an EPC available to a prospective buyer or tenant.
However, until now – the Landlord’s obligation stopped at providing the EPC and the tenant had no lawful ability to require the Landlord to carry out the recommendations in the EPC report.
So, what’s new? – Changes effective from 2016
From April 2016 a tenant of a domestic property can make a request to their landlord for consent to certain energy efficiency improvements to the property and the landlord cannot unreasonably refuse consent.
If you are asked by a Tenant to carry out works to the property, you should seek legal advice before refusing to do so.
That’s not all – Changes effective from 2018
From 1st April 2018, it will be unlawful to sell or let a property in England and Wales that has an EPC rating below grade “E”.
This will not affect any properties already let before 2018 but will affect any new leases or sales of property occurring after.
If any of your property stock is below grade “E”, from 2018 you will need to carry out works to raise it to the requisite standard before re-letting or selling the property.
Next Steps and going forwards
• Get valid EPCs and recommendation reports in place on all of your properties that require them.
• Check your EPCs to see if any of them fall within Energy Rating “F” or below.
• Create an action plan to implement any changes now to ensure that you are not left with unsellable or unlettable property in your portfolio.
Properties are already let?
1. Are you indemnified by the tenant against the cost of making energy performance improvements to your properties?
2. Are there any tenant break clauses in your lease that could leave you with unlettable property sooner than you think?
3. Are your properties subject to any exemptions from the minimum requirements?
About to let your property?
Make sure your lease properly protects you against the cost of making energy performance improvements to your properties.
Considering a Licence to Assign/Sublet?
Do not miss the opportunity to ensure the property is brought up to the requisite Energy Performance standard as a condition of granting consent.
How can we help?
Attwells Solicitors LLP can review your leases and report to you on your liability and your options for a fixed fee. We can draft new leases so that you are indemnified by the tenant against capital expenditure in compliance with laws. We are here to ensure that you receive a clear rental income from your residential and commercial property portfolio.
Attwells can also provide you with a panel of EPC providers so you can understand your liability.
Call Nick Attwell for further information on 0207 722 9898.