Assist Inventories reported earlier this year how Minimum Energy Efficiency Standards (MEES) introduced across England and Wales in April made it unlawful to grant a new lease for properties with an EPC rating below E.
E.ON Energy said a fifth of landlords expected to spend between £1,000 and £4,000 on improvements to ensure their properties are energy efficient. Draughty older homes still in bands F or G that couldn’t be upgraded meant owners were barred from agreeing new tenancies. Originally, the government claimed landlords would be exempt from having to make upgrades like new insulation if the costs exceeded £2,500. New regulations being brought forward mean landlords will need to pay more to be compliant because the cap will increase to £3,500 next year.
The Ministry of Housing released a statement saying the new regulations would speed up the process of ensuring rental homes meet the minimum Energy Performance Certificate rating of E. With fewer owners now exempt and having to pay up to £3,500 including VAT, can every landlord afford this? Especially those with multiple properties that need upgrading.
Mixed Reaction to the Government Costings
Comments made by Housing Minister, Heather Wheeler, have prompted an aggrieved response from some of the property industry. She said, “Most landlords will be unaffected by the changes as their properties are already compliant. Where upgrades are necessary, the average cost to improve an F or G rated property to a band E is expected to be around £1,200 – far below the upper ceiling being brought forward under new regulations.
“Examples of measures include: installing floor insulation, low energy lighting or increasing loft insulation.”
One landlord agreed that LED bulbs and loft insulation are a landlord’s duty. Floor insulation, however, would cost more than the government expects, “Floor insulation, meaning the whole ground floor of a property being dug up (while tenants are accommodated elsewhere for some weeks) isn’t going to be done within £3,500.”
If that is the case, then landlords will be able to register for exemption from having to upgrade their property. It’s called into question how the government has calculated its costing, with some saying it’s not reflective of the ‘real world’. The regulations could leave rural landlords feeling frustrated. An owner of two old village cottages says the properties were only just short of reaching band E. The EPC recommendations were installing internal wall insulation, floor insulation and solar panels. However, both properties are in a conservation area so changing windows is difficult. As gas wasn’t available and an oil boiler was expensive, they fitted an electric boiler but it scored very poorly for EPC ratings. They concluded, “There is absolutely no way any improvements can be done for less than £3,500.”
Another Upfront Cost for Private Rental Sector
Claire Perry is the Minister for Energy and Clean Growth and says this will help to drive up standards in the sector. She added, “Upgrading these homes so they are more energy efficient is one of the most effective ways to tackle fuel poverty and help bring down bills for their tenants, saving them £180 a year.”
The Chief Executive of ARLA Propertymark, David Cox, highlighted that landlords feel a lack of support from the government. Many wanted the Chancellor to reintroduce the Landlords’ Energy Saving Allowance (LESA) in his budget to include the recommendations report of an EPC. He commented, ““Under the Energy Act 2011, the government pledged to avoid any ‘upfront costs’ for landlords – a principle which has been disregarded by setting the cap as high as £3,500.
“Financial burdens for landlords have increased time after time, which is pushing rent costs up and driving buy-to-let investors out of the market.”
Mrs Wheeler said over 200,000 landlords will be affected by the new rules in 2019 but some of them will have access to a variety of funding schemes. Support is offered from the Energy Company Obligation (ECO) scheme and local grants to bring properties up to the required standard.
Accredited and Independent Professionals Assisting with EPC
For now, the minimum requirement is for rented properties to be a band E rating but if band D or C becomes the necessary standard then it could cause more problems in the future for landlords. As cold weather sets in you can’t ignore EPC ratings and improvements. Remember if you’re selling or renting a home you must have a valid EPC for buyers and tenants. Contact us to book an EPC assessment or for more details on our energy performance-related services.