EPC Rules on F and G Rated Properties

EPCs Rules on F and G Rated Properties

David Lawrenson of www.LettingFocus.com explains how you can still let a property that has the lowest F or G ratings on its EPC.

First some background.

The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 set out the requirement for domestic private rented properties in England and Wales to have a minimum Energy Performance Certificate (EPC) rating of E. (The lowest/ worst if G and the best is A).

  • From 1st April 2018, landlords were prohibited from granting new tenancies for properties with an EPC rating below E. This includes extensions and renewals of existing tenancies, or a tenancy becoming a statutory periodic tenancy following the end of a fixed shorthold term.
  • From 1st April 2020, this restriction (on landlords letting out F or G rated properties) will be extended to cover ALL existing tenancies – even when there has been no change in tenancy arrangements – for properties falling in the scope of the regulations.

Local authorities will enforce compliance and non-compliant landlords could face a financial penalty of up to £5,000.

For a few years now, the EPC must be shown to any tenants who come to viewings and provided to them at the start of the tenancy. (To prove this, we give it to them along with the property advert and also have them sign in the tenancy agreement that they have seen it, together with the government’s “How to Rent” document and that they confirm all smoke alarms are working at the start of the tenancy!).

Properties covered include any domestic privately rented property which has an EPC, and is either required to have an EPC; or is within a larger unit which itself is required to have an EPC, either at point of sale, or point of let.

EPC – The Properties Covered

The meaning of “domestic privately rented property” covers 1) Properties let under an assured tenancy or a shorthold, 2) A tenancy which is a regulated tenancy for the purposes of the Rent Acts, 3) Properties let on a tenancy which is an assured agricultural occupancy or on a protected tenancy under the Rent Act 1976 or on a statutory tenancy under that Act.

So most things really!

The Main Exemptions

So what happens if you did your best, carried out some improvements designed to increase the energy efficiency (and the score on the EPC) but the property still gets only an F rating. Would you still not be allowed to let it?

Whether you will or not will depend on if you can claim one of the exemptions set out by government. I will look at the main ones here.

EPC F and G Rated Exemptions

The first exemption is where you carried out every recommendation or “relevant improvement” you could, as recommended in your EPC advice, but the property still comes up short.

The second is where you have not been able to get the consent of a third party to carry out an improvement. A relevant third party, standing in the way, might include the consent of your mortgage lender or that of a local authority or even a tenant in situ. A local authority objection is most likely to occur where the improvement needs buildings regulation approval, planning permission or listed buildings consent.

The third is where you got advice in writing from an independent surveyor which says that doing the works would devalue the property by more than five per cent. This could include cases where the property is a flat and doing the works could devalue the building in which it sits by the same amount.

The fourth, and linked to the third exemption, is where you obtained a written opinion, from a suitably qualified person such as a surveyor or from an independent installer engaged to install the measure, advising that it is not an appropriate improvement due to its potential negative impact on the fabric or structure of the property (or the building of which it is part). This exemption is only in relation to wall insulation.

PRS Exemptions Register

If one of these exemptions applies, you will need to register it on the “PRS Exemptions Register”.

An exemption, once registered on the PRS Register, is valid for 5 years except where a tenant has withheld consent for energy efficiency improvements, in which case that exemption is only valid until that tenant’s tenancy ends (or after 5 years, whichever is sooner).

If you get an exemption, make a diary note to renew it in five years’ time.

Exemptions do not pass to any new owner or landlord of a property upon sale, or other property transfer. If a let property is sold or transferred, the exemption ceases and the new owner will need to either improve the property to the minimum standard at that point, or register an exemption where one applies.

The Register is an on line process and does not cost anything to complete but you will need to have the correct supporting evidence available when you make your application.

When completing the register, you will need to provide relevant documentation and supporting information. So, for example, copies of any correspondence and/or relevant documentation demonstrating that consent for a relevant energy efficiency measure was required and sought, and that this consent was refused, or was granted subject to a condition that the landlord was not reasonably able to comply with.

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We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. David Lawrenson, founder of LettingFocus, also writes for property portals, speaks at property events and is regularly quoted by the media.

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