Under 2010 Energy Act legislation, from April 2018 all properties have to be a minimum of EPC (energy performance certificate) rating E to be rented out. This applies only to new tenancies, but by April 2020 will cover existing tenancies as well.
Sally Lawson, CEO of estate agency franchise Concentric and president of ARLA, said many landlords may be unaware of the new rules as the government stopped funding the Green Deal in 2015.
Originally, energy efficiencies were to be paid for using the Green Deal, ‘pay as you save’ financing for improvements that would be paid for by tenants out of utility bills. Landlords were not expected to pay upfront costs. However, this is no longer an option.
“Now the Green Deal has collapsed what is going to happen? The simple answer is we just don’t know at this point in time,” said ARLA chief executive David Cox.
He said it is possible that the ‘at no upfront cost’ clause may be replaced with a £5,000 upfront cost cap. It also looks likely that some new Green Deal initiatives will launch soon as Greenstone Finance has taken over the government’s loan book.
“We have seen the emergence of a new Green Deal over the last few months. There is a company that has bought the Green Deal finance company’s loan book. They have invested hundreds of millions of pounds to reignite the Green Deal in the private rented sector. So will landlords be compelled to take out this new private product?”
There is also some local authority funding that can be accessed, though Cox said this is “patchy”.
Cox pointed out that when the legislation came in in 2010, there were 683,000 properties with band F or G EPC ratings. That figure has already fallen to around 300,000.
The legislation is likely to affect rural properties with solid wall construction that cannot be insulated. Houses of multiple occupation are exempt from needing EPCs, as are listed buildings, although if they do have an EPC they must comply with the legislation.
Lawson said landlords should get copies of their existing EPCs and understand what they can do to bring non-compliant properties to a Grade E or above. Simple things such as energy efficient light bulbs, and loft and tank insulation can make a big difference.
“Start now looking at these list of works and schedule some works to implement as much as possible,” she said. “Keep an eye out looking for the green deal initiative when it’s launched and apply immediately.”