The regulations also mean that from 1 April 2016, tenants living in F and G rated homes will be able to request improvements, such as more insulation. The landlord will then be legally bound to bring the property up to an E rating.
Almost 10% of England and Wales’ 4.2m privately rented homes* currently fall below the E rating. (Source: Government statistics, February 2015).
It is estimated that the new legislation will help around one million tenants, who are paying as much as £1,000 a year more for heating than the average annual bill of £1,265. These excessive costs are mainly down to poorly insulated homes, many of which are thought to be the oldest and leakiest rental properties in Europe.
Under the new legislation, if a tenant requests a more efficient home and the landlord fails to comply, the landlord could ultimately be forced to pay a penalty notice. Landlords will be able to let out F and G rated properties beyond 1 April 2018 for the remainder of existing rental contracts, but will not be able to renew a contract, or let the property to someone else until it is brought up to an E rating.
Michael Portman, Managing Director of LetRisks comments: “In just 12 months from now, landlords will be legally bound to bring their home to an E rating, if tenants request improvements, such as insulation. Within three years, landlords will be banned from renting out their properties if they do not meet the new EPC standards.
This legislation will have a significant impact on landlords with older, draughty properties in terms of extra expense and lost rental income, while they improve their properties. However, there will be a range of support mechanisms, such as the green deal and ECO schemes, that could alleviate upfront costs for landlords.
For landlords with F & G rated properties, they now have an increased risk unless they take action soon. Buy-to-let mortgage providers will require borrowers to comply with the regulations and valuers are likely to amend their criteria in the run up to 2016, making BTL mortgage applications more difficult.
What’s more, most insurance policies require landlords to comply with ‘all relevant statutory requirements’. This may mean that it could be more difficult to get insurance unless landlords comply with the forthcoming regulations.
Landlords and agents are running a risk if they have F and G rated properties and they need to manage this by upgrading and improving their properties. If Landlords are carrying out any work that is not routine repairs and maintenance, they should advise their insurers.
Letting agents that have F and G rated properties in their portfolio should be urging their landlords to start work on the properties, to bring them up to scratch. Otherwise, they could face the risk of losing some of their landlords because their properties have become illegal.
As a matter of urgency, agents and landlords that are currently renting out F and G rated properties should be reviewing the improvements that can be made, a well as researching costs and the help that is available through the Government’s Green Deal.
Agents and landlords should ensure that their properties meet the legal requirements. Under new legislation, landlords must ensure they have installed working smoke and carbon monoxide alarms in their properties, which is now mandatory, effective from October 2015.”
