Landlords – how to maintain or improve energy efficiency standards

Changes to energy efficiency regulations of the private rental market in the UK were heavily publicised in April. Housing Management & Maintenance even ran a countdown to the deadline piece in March, clearly setting out the rules that came into force on 1st April 2018.

To recap, the new Minimum Efficiency Standards state that all residential and commercial properties must receive an Energy Performance Certificate (EPC) of Grade E or above in order to be rented out. These rules have been in place for all new lettings and renewals since April and will extend to existing lettings two years after the initial deadline in 2020. For commercial properties, the new regulations come into force in 2023.

To be clear, if you have either a new tenant or your existing tenant renews their tenancy, you must ensure that the rental meets the Grade E standard. Fines of up to £4,000 may be issued in cases of noncompliance.

Recently, the effectiveness of this change in the regulations has been called into question. We’ve seen reports of landlords doctoring EPCs, and some property owners are happy to maintain a sub-Grade E score due to their interpretation of the wording in the new rules. The issues of who polices the regulations, how exactly they are enforced, and who is obliged to search for instances of noncompliance, are all up in the air.

The wording that some landlords look to in order to let out properties with substandard energy efficiency pertains to the cost of improving an EPC Grade. According to the regulations, property owners are only obliged to make necessary improvements if the work is done at ‘no cost’ to the landlord. This can be unrealistic.

Regardless of how these regulations are enforced, this aspect no doubt softens the impact on the private rental sector. Effectively, if the landlord cannot access a grant or some form of outside funding for improvements, there is no case to be heard for a property falling below energy efficiency standards.

Many argue that the private rental sector is in need of greater regulation — especially the residential market. Between 2015 and 2018, Members of Parliament tried introducing a bill that would require all residential private landlords to make their properties ‘fit for human habitation’. These attempts have failed so far. Rule changes like the EPC-related regulation shift in April may do little to dissuade rogue or uncaring landlords.

It is also important to have such regulations enforced to cut out instances of bureaucratic or systemic errors leading to poor quality living conditions, as well as making it less likely for ‘accidental landlords’ to fail to reach minimum standards.

Bringing a property up to the minimum Grade E standard, or ensuring a property maintains this standard, should not be viewed as a burden by landlords. As previously noted, these changes only have to be made if the required work can be carried out at no cost to the property owner. Now is a good time for landlords to explore the funding options available from third parties.

There are two main external funding streams that are straightforward to access for this purpose. More localised schemes may also be available. Research local schemes as your location or living situation may determine you are eligible for different funding programmes.

The chief external funding stream is the Green Deal Finance Company, a government-designed scheme in place to help homeowners and landlords invest in energy efficient and eco-conscious products and services for their properties. A simple online form can be filled out to show what landlords are eligible for.

The second funding stream is a little less obvious. Energy companies are sometimes obliged to assist in making improvements that will benefit the energy efficiency of the properties that they service. This is known as the Energy Company Obligation (ECO). Landlords should be granted support for improving their property or properties if they match certain criteria found on the ECO section of the Ofgem website.

Reports suggest that this ‘no cost’ to landlords ruling on improvements may change in April 2019, so it is important to consider that properties will have to be upgraded at the owners’ expense. This suggests letting agents and landlords should take an assessment of their stock, and put strategies in place to make upgrades to insulation, windows and heating systems to stay within the parameters set by law.

The three best ways to increase the energy efficiency of a residential property are:

  • Fit or repair double glazed windows. Properties with single glazing are not energy efficient, and many properties with old and poorly-kept double glazing will effectively lose heat through leaking seals. Speak to an expert to get a diagnosis and quote if you think your windows are not properly insulated.
  • Insulate your loft. This is a very simple procedure. A quarter of all the heat lost in an uninsulated home escapes through the roof.
  • Upgrade the boiler. Upgrading to a good value condensing boiler could make your EPC grade jump from F to E, and doing so takes no time at all. Old boilers are more hassle than they are worth — with the regulation change, upgrading makes more sense than ever.

Regardless of legislation, making improvements to energy efficiency means increasing the value of the property. Even if a landlord is not interested in selling, the potential yield from rents increases from an energy efficient property could be high, as it is an all-around better space worth more to tenants. It is, at the very least, prudent to make regular checks of the energy efficiency of your properties — whether regulations relating to the EPC change again in 2019 or not.

About the author: Terry McFadden founded Premier Windows in 1999 having previously worked for 25 years for fabrication and design of windows and doors in the UK.

Thanks to his past experience as a surveyor he now often consults others in the industry and is a leader in combining new products to meet requirements in conservation areas all over London.